Israeli Stock Market Ends Fiscal Year With Strong Gains Amidst Wide Sector Disparities

The Israeli stock market concluded fiscal year 5796 (Tashpa"d) with significant gains, as the TA-35 index surged 41.5% and the TA-125 index rose 36%. These figures positioned the Tel Aviv Stock Exchange as one of the world's top performers, surpassed only by South Korea. However, the overall success masked considerable volatility, with some companies experiencing dramatic value erosion.

Among the year's biggest losers was Tikun Olam Cannabis, which plummeted 95.3% due to declining cannabis operations and a shift from growth promises to survival struggles. The company reported sharply lower revenues and significant losses, leading to a creditor arrangement that included selling its cannabis business and stock shell, alongside a drastic share consolidation. Alarum followed, down 89.3%, after its subsidiary was investigated by the FBI for allegedly connecting home computers to a proxy network without user consent, leading to asset seizures and operational suspensions.

Kan-Pay Biopharma completed the list of major decliners, falling 88.5%. This biopharmaceutical company, lacking a significant commercial product, faces ongoing expenses and negligible revenue, with its value tied to clinical trial outcomes and fundraising success. Its stock suffered from dwindling revenues, deepening losses, and a low cash reserve, despite ongoing trials for various diseases.

On the upside, technology, industry, and energy stocks led the market. Stark Power Power topped the entire exchange with a 652.7% increase, followed by Oron Group (274.2%) and Bazan Oil Refineries (245.7%). Within the TA-125 index, Doral Energy led with a 237.1% gain, alongside IEL (226.4%) and Bazan (196.6%). These gains reflect a recovery from low prices and investor preference for companies exposed to energy, security, and infrastructure sectors.

Despite the overall positive year for the main indices, significant disparities existed. Electra Real Estate was the weakest stock in the TA-125, down 55.3%, impacted by rising interest rates and declining asset values in its US housing rental portfolio. Erit Industries fell 55.1% after a period of rapid growth, as revenue and profit declines, coupled with a shrinking order backlog, led to a valuation correction, though the company distributed substantial dividends. Nice saw a 40.8% drop as investors worried about artificial intelligence disrupting its customer service systems market, despite acquisitions aimed at strengthening its AI capabilities.