Tel Aviv stocks hit record closing high as Israel plays catch-up
Blue-chip share index hits record closing high on Wednesday. Tel Aviv 25 index rises 0.7% to close at 1,344.34 points, surpassing prior record of 1,341.89 hit in April 2011
Israel's blue-chip share index hit a record closing high on Wednesday, having lagged many of its counterparts across the world for nearly three years as political instability clouded investor perceptions towards the Middle East.
The Tel Aviv 25 index rose 0.7% to close at 1,344.34 points, surpassing the prior record of 1,341.89 hit in April 2011 and only marginally off its all-time high. The broader TA-100 gained 0.7% to 1,213.26 points, about 40 points shy of its record.
New Chief
Following Ester Levanon's resignation in July, Tel Aviv Stock Exchange names Yossi Beinart as new CEO. Levanon, who expressed disappointment board did not support her plans to increase trading volumes, to step down by end of year
That took the blue-chip index's gains so far this year beyond 13%, though traders said prospects of a further rally will depend in part on how international talks with Iran over its nuclear programme progress.
The index gained 9.2% in 2012 and fell 18.2% in 2011, when the Arab Spring revolts flared in neighbouring Egypt and Syria.
By comparison, Europe's FTSEurofirst 300 index is up close to 15% this year after a 13.2% rise in 2012 and 10.7% decline in 2011 - itself eclipsed by Wall Street's Nasdaq Composite.
"The geopolitical issues have receded a bit," said Zach Herzog, head of international sales at Psagot Securities in Tel Aviv. "The recent strength in the market is catching up to global equities."
The local market this year has largely been driven by gas exploration companies, which comprise some 10% of the TA-25 index. Delek Drilling and Avner Oil Exploration , for instance, are up nearly 30% this year.
In March, the large Tamar well off Israel's Mediterranean coast began production, while the larger Leviathan site nearby is set to come online in another few years and much of its gas reserves will be for export.
Telecoms companies have also helped, with gains of around 50% after steep losses the prior two years following regulatory changes and the addition of host of newer companies that sparked a mobile phone price war.
Volumes in Tel Aviv remain fairly low, however, averaging around 1 billion shekels a day this year - 47% of the level in 2010.
Most of the gains have come from local investors, mostly institutions, which comprise about 85% of activity.
A large chunk of foreign investment left Israel after MSCI upgraded Israel to a developed market in mid-2010, leading to an exodus of passive money from emerging market funds.
Foreign participation has increased of late, though, partly due to a strong shekel.
"Institutional investors are happy to be part of a market where equity gains are not being wiped out by currency losses," Herzog said. "That's a big draw."
