Shares on the Tel Aviv Stock Exchange are falling sharply today after world markets were hit last night by another corporate accounting bombshell from US telecom company WorldCom.
Nasdaq futures, a key indicator for the local market, are currently over 4% in the red. After US markets closed on Tuesday, WorldCom said it would have to restate financial results to account for billions of dollars in improper bookkeeping. The announcement followed another down day for US stocks, which now stand at September 2001 lows.
The WorldCom announcement and a fresh profit warning this morning from telecom equipment maker Alcatel has prompted a slump on European bourses, where sentiment on tech stocks is shattered. The London FTSE-100 is down 3%, the Frankfurt DAX is down 3.8% and the Paris CAC-40 is down 3.65%.
In Tel Aviv, the picture is slightly brighter, but shares are still deep in the red. At web-posting, the Tel Aviv 25 index is down 2.1% at 355.26 points, the Tel Aviv 100 index is losing 1.68% to 345.62 points, and the Tel-Tech 15 index is losing 2% to 203.01 points. Turnover totals NIS 82 million so far.
Meanwhile, another key mover for the market - the shekel - is currently strengthening against the dollar in inter-bank trade. The shekel’s advance to below the NIS 4.9/$ mark is encouraging, as investors will likely see it as a sign that the Bank of Israel’s 2% hike in the interest rate was enough to support the ailing Israeli currency. The shekel is currently trading at 4.8923/$, a 0.54% appreciation since Tuesday.
On the TASE, all Tel Aviv 25 shares are in negative territory, with 18 out of 25 losing more than 2%.
The best performers in the Tel Aviv 25 index are exporting companies, who are likely to benefit from the shekel’s recent slide against the euro. Israel Chemicals and MA Industries are both down 1%, while defense systems company Elbit Systems (Nasdaq: ESLT) is losing 1.7%.
In the banking sector, Bank Leumi (-2.2%) and Bank Hapoalim (-2.9%) are both declining sharply after adding over 4% on Tuesday.
Israel Discount Bank is losing 1.2%. Hebrew daily “Maariv” reports that Nochi Dankner, who controls the Ganden group, is proposing to the Bank of Israel Supervisor of Banks the future sale of part of IDB’s holdings in Israel Discount Bank. According to the report, the Supervisor of Banks will not have to approve the status of Yitzhak Manor in the group buying IDB (led by Dankner) if IDB ceases to be a controlling shareholder of Discount Bank. Manor is also a controlling shareholder in Union Bank.
Shares of holding company Koor are losing 2.8% on a NIS 2.3 million turnover. Hebrew daily “Yediot Ahronot” reports that shares of Koor’s defense systems subsidiary Elisra Electronic Systems will be launched in New York. The newspaper says the issue will take place after the sale of 30% of Elisra to Elta Electronic Industries.
Meanwhile, other holding companies are seeing their shares plunge. IDB Holdings is down 3.3%, IDB Development is down 3.2%, and Discount Investment Corporation is off 4.5%.
Among dual-listed shares, market heavyweight Teva (Nasdaq: TEVA) is down 1.9% and is trading 1.4% below the price of its US share. Teva said on Tuesday that it had completed the previously announced acquisition of Honeywell Pharmaceutical Fine Chemicals S.r.l., an Italian maker of active pharmaceutical ingredients.
Not all shares are stuck in the red. Delek Drilling is gaining 8.4% on twice the average daily volume, while Avner Oil Exploration is adding 6.5% on a NIS 1 million turnover. Today, the Yam Thetis consortium signed a definitive agreement - worth $1.5 billion over 11 years - for the sale of natural gas to Israel Electric Corporation. The consortium is made up of Samedan Oil Corporation, Delek Drilling, Avner Oil Exploration and Delek Investments and Properties.
Tel Aviv 100 share Housing and Construction is up 0.2% on a NIS 120,000 turnover, after confirming that it had won a €2.7 billion contract to build and operate a toll road in the Czech Republic.
Arbitrage gaps
| Stock | % Change* |
| Audiocodes | -5.0 |
| Blue Square Israel | -0.3 |
| Delta Galil | -1.7 |
| Elbit Systems | 0.1 |
| Elron | -0.6 |
| Formula | -0.8 |
| Koor | 2.5 |
| Magic | -4.3 |
| Matav | -3.4 |
| Nice | -0.6 |
| Partner | -1.1 |
| Teva | -0.1 |
| Tower | -1.0 |
*%change required in Tel Aviv to meet New York closing price
Published by Globes [online] - www.globes.co.il - on 26 June, 2002