Netanyahu gives TASE (Tel Aviv Stock Exchange) a shot in the arm ("The Bibi Effect")

Globes ^ | 27 February 2003 | Yaron Friedman

[anotherview]

Netanyahu gives TASE a shot in the arm

For several days, I’ve been predicting that options expiration day would restore the 305-310 level, and that was before one man grabbed the spotlight - Benjamin Netanyahu.

Yaron Friedman 27 Feb 03 18:12

The Tel Aviv Stock Exchange (TASE) indices rose today. The Tel Aviv 100 rose 3.18% to 323.63 points, the Tel Aviv 25 index rose 4.37% to 319.02 points, and 3.8% for the week, and the Teltech rose 0.99% to 170.60. Turnover was NIS 537 million.

After months of depression, there was a surge of optimism today on the battered local stock market. It seems that investors woke up this morning with an appetite to buy, as seen in the expiration of the Tel Aviv 25 options, and the welcome for the new Sharon government, and especially its new minister of finance. On its way up, the investors ignored global events, which saw the European bourses take a dive on yesterday’s bad news from Wall Street.

The Tel Aviv 25 index’s rise today, and for the week, finally pushed it above the 310-point level. The day’s heavy volume was mostly, but not entirely, due to the expiration of Tel Aviv 25 options.

Devastating optimism

For some market players, the surge ruined their day. For several days, I’ve been predicting that the expiration of the options would restore the 305-310 level, and that was before one man grabbed the spotlight - Benjamin Netanyahu. His announcement accepting the finance portfolio ignited the market today, which, some sources say, messed things up for quite a few speculators who had gambled on lower expiration prices.

The optimists faced off against the speculators who had aimed at Tel Aviv 25 options expiring below 310 points, and tried to force the index down - without success. The expiration volume was rather higher compared with recent transactions, ultimately raising the index to 313.87 points, 2.69% above its baseline. The options turnover was also a high NIS 243 million.

Teva rose only 0.9%

Market players’ words matched their deeds today. After a protracted depression, there was an outbreak of optimism today that drove many Tel Aviv 25 shares up over 5%. Among the highest winners were IDB Development Corp. (TASE:IDBD) - up 7.4%; IDB Holding Corp. (TASE:IDBH) - up 6.4%; Clal Insurance (TASE:CLIS) - up 6.7%; Israel Corp. (TASE:ILCO) - up 3.9%.

One of today’s laggards was Teva (Nasdaq: TEVA; TASE:TEVA), which had to be satisfied with a 0.9% rise, after opening with a minus 0.4% arbitrage gap. I’ve already mentioned that Teva isn’t really a TASE share, and today provided additional proof.

Another outstanding share today was Bank Hapoalim (LSE:BKHD; TASE:POLI), despite the waning of the effect from the expiration of the lock-up of employee-owned shares. 55 million employee-owned shares were released yesterday, generating a turnover of NIS 155 million in the share. But the share didn’t collapse yesterday as institutional investors bought up any shares put up for sale, seizing the opportunity to accumulate shares cheaply.

I was told today that most Bank Hapoalim employees opted to utilize the attractive follow-on loans the bank offered to hold onto their shares. Only 30% of the bank’s employees sold their shares yesterday, while the rest decided to wait for better times to sell.

Bank Hapoalim continued demonstrating strength today, probably thanks to the continued amassing of shares by institutional investors and assisted by the expiration of the Tel Aviv 25 options, rising 4.9% on a huge turnover of NIS 70 million.

Migdal Insurance (TASE:MGDL) published its financial report today. Its profit in 2002 totaled NIS 101.2 million, a 77.4% plunge from its NIS 447.7 million profit in 2001.

The TASE welcomed Migdal’s results, since it had been expected far worse numbers, driving the share up 5.3%, to join in the day’s general celebratory atmosphere.

Has Givot Olam found more oil?

We cannot conclude without mentioning the week’s hottest share: Givot Olam Oil Exploration Limited Partnership (TASE:GIVO.L). Givot Olam rose from NIS 0.018 to NIS 0.078 this week, before losing half it value.

Givot Olam announced early this week that it had found “droplets” of oil at its Meged 4 drill site near Rosh Ha’Ayin. The announcement ignited the current round in the share, which seems to have ended yesterday.

Givot Olam poured oil on the flames today, announcing it had found more signs of oil at a depth of 4,500 meters. Signs were enough for the investors, and the share promptly rose 7.5% to NIS 0.043 on a turnover of NIS 3.7 million. The final results from the test will be delivered in a month, and it will be interesting to see how they will affect the investors and what will happen to the share. What is certain is that investing in oil is not for the faint-hearted, but only for thrill-seekers.

The shekel also rises

The Bibi effect was also felt in the foreign currency market. The shekel rose 0.35% against the dollar to close at NIS 4.841/$, its lowest exchange rate in almost a month.

Published by Globes [online] - www.globes.co.il - on February 27, 2003

[Maximum Leader]

I read somewhere on the web that the Israeli stock market has a ridiculously low P/E ratio, something like 2 (the US markets, even after the beatdown they've take over the last few years are still around a 30).

I'm tempted to put some cash into an Israeli mutual fund. I think the upside is a tad bigger than the downside.