Shares on the Tel Aviv Stock Exchange (TASE) retreated into negative territory in the afternoon, as the shekel’s steep slide underlined investors’ lack of confidence in the Israeli economy.
At web-posting, the Tel Aviv 25 index is down 0.1% at 387.35 points; the Tel Aviv 100 index is unchanged at 377.24 points. The Tel Tech index is advancing 1.5% to 229.37 points. Turnover is moderate, totaling NIS 194 million so far.
The TASE started today’s session with impressive gains, with the leading Tel Aviv 25 index up almost 1% in morning trade. In the afternoon, however, the tide turned and the shekel steadily weakened against the dollar to record lows. At web-posting, the Israeli currency stands at NIS 4.94/$, a 1.2% depreciation since Monday.
The shekel’s decline is worrying because it reflects the lack of confidence in the Israeli economy and brings with it the prospect of further increases in the interest rate. Bank of Israel Governor David Klein said after raising the interest rate by 1% yesterday that he would continue to raise rates until inflation was within the government’s target range.
Shares of holding company Koor Industries (NYSE: KOR) are up 1.6% after the company reported this morning that a loss of $105 million in the first quarter.
Net loss for the quarter - excluding a special accounting item for foreign currency translation adjustments - was $23 million, or $1.52 per share, compared with a net loss of $214 million for the first quarter of 2001.
Operating income from consolidated companies for the quarter was $43 million, compared to $9 million for the same period in 2001, nearly a 400% increase. The relatively positive results have not been enough to help shares of Bank Hapoalim (-0.7%), which owns 20% of Koor.
Other holding companies are performing well today, possibly on the back of Koor’s results. IDB Holdings is up 1.1% and IDB Development is up 0.2%.
Israel Corporation is up 1.2%, despite a report in Hebrew daily “Yediot Ahronot” that the company will report a NIS 50 million loss for the first quarter. The expected loss at Israel Corporation follows reported losses by its subsidiaries and affiliates, including Tower Semiconductor (Nasdaq: TSEM), Oil Refineries and Zim Israel Navigation.
In the banking sector, shares of United Mizrahi Bank are soaring 2.8% on a huge NIS 29 million turnover, a day after Bank Leumi shares added 5.5% on the back of better than expected first quarter results. Today, the vesting period for part of the United Mizrahi Bank shares held by employees ends. The shares' current value is NIS 72 million.
First International Bank 5 shares are sinking 2% after Moody’s Investors Service placed on review for possible downgrade the bank’s C financial strength rating.
Meanwhile, Bank Leumi (-1.4% at NIS 6.22) may be suffering from profit taking, after yesterday’s climb. Today, Goldman Sachs said it had maintained its “Market Performer” rating for Leumi but chopped its fair value to NIS 6.89 from NIS 8.24.
Telecom company Bezeq is up 1.7% after its 44.9% owned satellite TV affiliate YES reported that its net loss narrowed to NIS 167 million in the first quarter of 2002, compared with a net loss of NIS 239 million in the preceding quarter. Bezeq is due to report its first quarter results later today or tonight.
Israel Chemicals is up 1.6%. The company announced today that its revenue declined to NIS 2.07 billion in the first quarter of 2002, from NIS 2.21 billion in the corresponding period in 2001. Profit increased to NIS 93.7 million in the first quarter, compared with profit of NIS 84.7 million in the corresponding period.
Tower Semiconductor (Nasdaq: TSEM) is up 4.7% after announcing that orders throughout the second quarter were higher than previously expected. The company expects sales in the second quarter will be at least 35% higher than in the first quarter of 2002.
Market heavyweight Teva (Nasdaq: TEVA) is up 1%, possibly on the back of a 1.3% positive arbitrage gap.
Published by Globes [online] - www.globes.co.il - on 28 May, 2002