More weakness expected on TASE

Investors’ primary concern today is likely to be the shekel’s weakness. At web-posting, the Israeli currency is weakening 0.3% to NIS 4.886/$ in inter-bank trade, raising concerns of a new spurt in inflation and a further interest rate hike.

Abroad, the picture remains depressing, as investors’ concerns about Iraq, corporate earnings and economic slowdown continue to weigh on markets. On Wall Street, shares closed in negative territory on Monday, after a huge sell-off on European bourses. The Dow Jones ended yesterday’s session down 1.42% at 7,591.93 points and the Nasdaq shed 2.26% to 1,172.06 points.

Traders in Tel Aviv have noted that the local market was surprisingly resilient on Monday to losses in Europe. On Monday, the Tel Aviv 25 index closed 0.36% lower, at 344.46 points; the Tel Aviv 100 index closed 0.09% lower, at 336.75 points; and the Teltech index closed 0.56% lower, at 170.24 points. Turnover was NIS 180 million.

Shares of supermarket chains and food manufacturers may attract interest. Hebrew daily “Maariv” reports that Super-Sol will cut 2% from payments made to suppliers, following a recent decline in profitability.

Banks shares may be pressured lower. Prices continued to fall on the bond market on Monday, as yields on long-term Shahar bonds rapidly approached 12%. The Ministry of Finance yesterday issued 4.775-year series 2670 Shahar bonds at a yield of 12%. This yield is even higher than was recorded at the height of the last crisis, in June, when it reached 11.8%. Falling bond prices have raised concerns about profitability for Israel’s banks and insurance companies, which have large bond portfolios.

Dual-listed shares’ arbitrage gaps are mixed, although chip maker Tower Semiconductor (Nasdaq: TSEM) stands out with a 12.3% negative arbitrage gap with its Nasdaq-listed share.

Arbitrage gaps

Published by Globes [online] - www.globes.co.il - on 1 October, 2002