Weekly summary: Stock market trading ended on a low note this week, due to political instability and ongoing discussions of the 2007 budget.
The TA-25 index fell 2.7 percent to 798.49 points; the TA-100 index fell 2.6 percent to 782 points. The TelTech 15 fell 0.8 percent to 346.62 points.
FMS stocks fell 30 percent this week. At the beginning of the week, the company –a leading manufacturer and supplier of technologically advanced lightweight ballistic armor materials – announced a delay in supply of materials to the American company, Honeywell, who is responsible for providing protective vests to the US military. Additionally, the company reported reduced second quarter earnings.
Stocks for the Makhteshim-Agan Industries Ltd. agrochemical firm fell 5.5 percent this week. The Goldman Sachs investment firm sold NIS 80 million worth of the company's stocks Wednesday. It is believed that the stocks were bought by various companies run by businessman Nochi Dankner, who controls Koor Industries, of which Makhteshim-Agan is a subsidiary.
This week, Bank Leumi stocks fell 2 percent, and Bank Hapoalim stocks fell 1.3 percent. A Merrill Lynch analyst said “if an asset is always cheaper than its peers, as shown by our relative multiple comparison of Israel’s banks, we have to ask why. Quite simply, with Israel’s five largest banks controlling 95 percent of the market by net assets and low credit potential (loan-to-GDP ratio stands at 112 percent, one of the highest in GEM), we believe their growth potential is limited."
“We think Israeli banks should be part of any emerging-markets portfolio when volatility in those regions increases. Long term, we would overweight only Hapoalim in the context of an emerging-market portfolio, because that is where we see the greatest upside potential (our target price of NIS 25 suggests 30 percent upside). We have lowered our price objective on Bank Leumi to NIS 18 per share, mainly due to concerns as to retail lending growth and sluggish new ownership."
The dollar started to show signs of recovery after reaching a low rate of 1:4.35 against the NIS.
"Wednesday’s most commented data release, the US Q2 unit labor costs, was probably not enough on its own to encourage traders into short Euro-positions", said Rafael Manasheof currency trader at Finotec Trading.
"In fact, the numbers actually raised some skeptical eyebrows. But the apparent strong rise in wage growth certainly nourished the view that the evening’s Beige Book would reveal an upbeat/inflationary outlook for the US economy".
"Moreover, the Israel political situation is pushing investors to sell the NIS after reaching high levels against the USD because the Knesset budget probably will not be approved", added Manasheof.
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