The Tel Aviv Stock Exchange (TASE) indices rose today. The Tel Aviv 100 rose 0.97% to 325.09 points, the Tel Aviv 25 index rose 1.81% to 330.94 points, and the Teltech rose 0.53% to 1602.08 points. Turnover was NIS 221.9 million.
No one on the TASE was knocked off their feet this morning when Prime Minister Ariel Sharon announced the dissolution of the Knesset. After opening positively, the capital market demonstrated unease prior to Sharon’s announcement, but the moment the truth was out, traders apparently calculated that the demon wasn’t so bad after all, and went back to buying shares.
The indexes, which opened with a 1% rise, went into negative territory during the prime minister’s press conference, but then went back up as soon as it was over.
Government down, but not the market
So why was the market apathetic to the fall of the government? It’s quite simple. The news surprised no one; it was a collapse foretold from the moment the Labor Party quit the coalition.
Investment house Ilanot Batucha believes early elections are not necessarily a bad thing, and might be good. Ilanot Batucha emphasizes that no one should have been surprised by the move.
As for the repercussions, Ilanot Batucha noted that no government will be able to carry out election economics, the disease of governments before election campaigns, in the brief period before the elections. Elections economics would be especially damaging in the current economic climate. The absence of a narrow government, in which the extortion power of the coalition partners is high, is also a positive development, since it would have resulted in a substantial increase in government spending.
Ilanot Batucha concludes that historical figures show that the capital market performs positively after elections, which means that early elections may in the end be good for stocks.
Profit taking at Teva
After an impressive positive run, profit taking dominated Teva (Nasdaq: TEVA; TASE:TEVA) today. After rising 16.5% in two weeks, Teva fell 2.6% today on lively trading, after opening with a 0.3% negative arbitrage gap.
Another factor pressuring Teva was an announcement by Merck & Co. (NYSE:MRK) last night that the US District Court in Wilmington, Delaware, upheld the company's patent protecting Fosamax (alendronate sodium), a treatment for osteoporosis, against Teva.
A correction in the food industry
The retail chains corrected today. Super Sol (NYSE: SAE; TASE:SAE) rose 1.8%; Blue Square Israel (NYSE: BSI; TASE:BSI); and Blue Square Properties rose 1.7%. On the other hand, food manufacturers fell today: Osem dropped 1.2%; Elite 5 by 1.6%, although Elite 1 remained unchanged.
Elbit Systems (Nasdaq: ESLT; TASE:ESLT), which plummeted yesterday following the Turkish election results that showed the Islamist Justice and Development Party winning an absolute majority, also corrected today. Yesterday’s fall was due to fear that the new Turkish government would be hostile to Israel and cancel the procurement and upgrade contracts with Israeli defense companies, Elbit Systems included.
Elbit Systems rose 4.1% today. The company will publish its third quarter financial report tomorrow. It is expected to show further revenue and profit growth.
Still believing in MA Industries
There was a positive atmosphere surrounding MA Industries also today. The company, which has benefited from a tail wind since publishing its quarterly results, won investors’ confidence by showing a higher net profit, despite concerns about the South American market in general and Brazil in particular.
MA Industries held a conference call with investors yesterday, at which its executives stated the company’s exposure in Brazil was less than $20 million, and expressed confidence that this debt was quite safe, and if it wasn’t, a write-off would have only a small effect on the company’s results.
The capital market believed MA Industries management, who have proven more than once that they are one of the best and most trustworthy management teams on the market, which is why the share is heading up, rising another 3.6% in lively trading today.
Israel Chemicals, which has risen 4% so far this year, rose another 2% today.
Bank Leumi also had a good day, thanks to reports that Migdal Insurance was tying up a deal to buy the controlling interest in United Mizrahi Bank from the Ofer and Wertheim families (which each own 26% each of Mizrahi Bank). Migdal has offered to sell its 9.5% stake in Bank Leumi to the Ofers and Wertheims as part of the purchase of Mizrahi Bank.
Bank Leumi rose 1.7% today and Mizrahi Bank rose 0.5%.
Published by Globes [online] - www.globes.co.il - on November 5, 2002