Stocks are falling like a ton of bricks, banks are getting weaker. More evidence of economically-bankrupt Israel. What was that again about Israel being a “land of milk and honey”?
Israel stocks lower as key banks weaken
By Robert Daniel, MarketWatch
Last Update: 1:32 PM ET Nov 28, 2006
TEL AVIV (MarketWatch) — Israeli shares fell on Tuesday, led lower by weakness in two key banks.Strength in Teva Pharmaceutical Industries (TEVA : 32.40, -0.36, -1.1%) and two major chemicals producers cushioned the market’s pullback, however.
The Tel Aviv Stock Exchange’s benchmark TA-25 index closed off 0.29% to 922.02, while the TA-100 index fell 0.38% to 928.13.
The Tel-Tech 15 got hammered, with all but one of its 15 members losing ground. The index of top technology issues shed 1.8% to 377.06.
The most-active issues were Bank Leumi and Bank Hapoalim, with Leumi falling 1.5% to 16.87 shekels ($3.92) and Hapoalim losing 1.4% to 20.81 shekels.
Together, the banks accounted for more than an eighth of total TASE volume of $290 million. That total in turn is shy of the average daily TASE trading through October of $332 million.
Leader & Co. reiterated its recommendations on the banking sector as a whole: It rates Leumi as a buy and Hapoalim, Discount and Mizrachi as outperform.
“The banks currently trade at [a price-to-earnings multiple of] 10-11 with strong growth potential,” analyst Alon Glazer wrote in a note. “The banks will continue to present [return on equity] of about 15% in the coming years and [a] decent 4%-6% dividend yield with a lower risk than other sectors.”
Meanwhile, Africa Israel Investments (AFIVY : 0.00, 0.00, 0.0%) slipped 0.2% to 295.5 shekels. It was downgraded to neutral from buy at UBS, though analyst Darren Shaw also raised his price target on the real-estate investment company.
“Despite our view that AFIL’s portfolio of assets and management’s ability to continue to increase the [net asset value] are both very high quality, we believe the share price is approaching fair value,” Shaw wrote in a note.
The move followed by a day management’s announcement that Moscow authorities had approved a company plan to build a development project it described as mixed-use but largely features office towers.
Shares of Koor Industries (KOR :10.42, +0.22, +2.2% ) added 1.6% to 224.4 shekels. The company’s ECI Telecom affiliate (ECIL :8.35, -0.01, -0.1% ) received a contract to upgrade Beijing Power’s optical-communications network in preparation for the 2008 Olympics.
And Koor Corporate Venture Capital said it sold its holdings in Followap, a U.K. provider of telecommunications solutions, for $13.3 million. It sold the stake as part of the $139 million sale of Followap to NeuStar (NSR : 31.65, -0.14, -0.4% ).
Bezeq edged down less than 0.1% to 6.7 shekels. The telecommunications provider on Monday declared a dividend of 0.115 shekel a share, which Leader said gave the company a compounded annual dividend yield approaching 11%.
Teva Pharmaceutical’s shares rose 0.6% to 141.6 shekels.
Israel Chemicals, which produces fertilizers, tacked on 1.5% to 25 shekels. Makhteshim-Agan, a producer of agrichemicals, climbed 1.4% to 22.38 shekels.
Among Tel-Tech components, defense contractor Elbit Systems (ESLT : 33.18, +0.03, +0.1% ) traded most actively, off 1.5% to 142.4 shekels, followed by payment-solutions provider Verifone (PAY : 32.99, -0.76, -2.3%) , down 4.1% to 141.2 shekels; Retalix, down 2% to 71.97 shekels, and Nice Systems (NICE : 31.55, -0.07, -0.2%), a provider of digital recording and archiving systems, down 2.4% to 136.1 shekels.
Retalix (RTLX : 16.80, -0.59, -3.4%) , the Ra’anana, Israel, producer of management systems for supermarkets and distributors, swung to a third-quarter loss from a year-earlier profit as revenue slipped 2.4%. The company had warned of the loss at the end of October.
The one gainer in the Tel Tech was Aladdin Knowledge Systems (ALDN : 18.20, -0.20, -1.1%) , the producer of security software, up 0.8% to 80 shekels.
Off the Tel-Tech index, shares of Ituran (ITRN : 16.28, +0.13, +0.8% ) edged up less than 1% to 69.77 shekels. The provider of vehicle-location and -recovery technology and services was reiterated at a rating of outperform by William Blair.
Rounding out the action, Israel Land Development rose 1.9% to 18.81. The company said it agreed to sell the Yorkgate Mall in Canada. The mall is held 75% by the company and 25% by an affiliate. End of Story
Robert Daniel is MarketWatch’s Middle East bureau chief, based in Tel Aviv.