Tel Aviv Main Indes Falls 2.9% In Week On Europe Worries

It was another dramatic week for the Tel Aviv Stock Exchange, where shares again took a pounding prompted by the far-reaching changes underway in the domestic telecommunications market and by Europe’s gathering financial storm. The benchmark TA-25 index dropped 2.9% while the Banking index fell 3.8%.

But it was the Communications index that was worst hit this week, plunging 8.8% to 443.15, led by Partner Communications Co Ltd (PTNR:IT), whose share price dropped a stunning 20%. Cellcom Israel Ltd. (CEL:IT) and Bezeq The Israeli Telecommunication Corp Ltd (BEZQ:IT) weren’t much behind, shedding 11.3% and 13.5%, respectively. The index has declined 41% since the start of the year.

Thursday saw particularly turbulent trading. Up to the expiry of the Maof at the start of trading, the TASE indices saw gains of up to 0.8%. But shortly afterwards, trading moved deep into negative territory, led by the telecommunications and banking shares. In the early afternoon, after future contracts on Wall Street pointed to gains, the TASE’s indices turned higher.

At closing time, both the TA-25 and TA-100 were both up 0.6% to 1,050.92 and 970.91, respectively. The Real Estate index ended pretty much unchanged at 274.86 while the Oil and Gas index added 1.7% to finish at 1,158.44. By contrast, the Banking index finished down 1.6% at 885.12, extending a 3.5% drop on Wednesday.  NIS 2.2 billion ($570 million) in shares changed hands, significantly higher than the average for a Maof-expiry day.

The expiry of the TA-25 contract was done at 1,048.78. The TA-Banking contract was fixed at 898.35. Israel Chemicals Ltd (ICL:IT) was set at 3,980 agorot, Bank Hapoalim BM (POLI:IT) at 1,286, Bank Leumi Le-Israel BM (LUMI:IT) at 1,009, Teva Pharmaceutical Industries Ltd (TEVA:IT) at 14,940, Israel Discount Bank Ltd (DSCT:IT) at 417.2 and Mizrahi Tefahot Bank Ltd(MZTF:IT) at 3,180.

The corporate bond indices – the Tel Bond 20, 40 and 60 as well as the Tel Bond Shekel – registered increases of up to 0.13% on Thursday, ending the week up 1.3%. Government bonds also ended higher on the assumption that the Bank of Israel will likely lower the base interest rate due to the Greek financial crisis.

The Communications index actually posted a modest increase on Thursday of 0.8%. Partner, controlled by Ilan Ben-Dov, was down 5% by the end of the session as was its parent company, Scailex Corp Ltd (SCIX:IT), which declined 7.4%. However, Suny Electronic Inc Ltd (SUNY:IT), which is Scailex’s parent and sits at the top of Ben-Dov’s corporate pyramid, gained 3.6%. That was a modest improvement that did little to dent Suny’s 36% drop over the course of the week.

Bezeq, which is controlled by Shaul Elovitch, rose 2.9% on Thursday, rebounding from a 5% drop the day before. It was down 13.5% for the week. Two other Elovitch companies – B Communications Ltd (BCOM:IT) and Internet Gold-Golden Lines Ltd (IGLD:IT)- ended higher by 6.7% and 8.3%, respectively.

Teva ended 1.6% higher even as it revised its 2012 earnings outlook downward, saying sales would range between $20 billion and $21 billion, $2 billion less than its estimate at the end of 2011. Earnings per share were revised to $5.30-5.40, compared with an earlier $5.48-$5.68.

The recurrent concerns about Greece and Europe’s other weak economies were exacerbated on Thursday by German economic data suggesting that even the continent’s strongest economy isn’t immune. As a result, the euro hit a near two-year low against the dollar after Ifo business climate index and manufacturing PMI data for May were both weaker than expected.

The euro lost approximately 0.9% to the shekel to 4.8359, and the dollar 0.31% to 3.8470.

Reuters contributed to this report.

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