El Al and Doral Energy to Join Tel Aviv Stock Exchange's TA-35 Index
Translated & summarized from Ice by baba
El Al and Doral Energy will join the Tel Aviv Stock Exchange's TA-35 index on November 5, marking their first inclusion in the flagship index. Three companies, Y.H. Demari, Shufersal, and Cannon, will be removed from the TA-35 and moved to the TA-90 index. The index rebalancing is expected to involve transactions worth approximately 10 billion shekels. Despite their upgrade, El Al and Doral Energy anticipate significant sell-offs from tracking funds, while exiting companies may see buying demand.
The story in 6 lines · by baba
- El Al and Doral Energy will join the TA-35 index on November 5, a first for both companies.
- Y.H. Demari, Shufersal, and Cannon will be removed from the TA-35 and moved to the TA-90 index.
- The index rebalancing is expected to generate transactions totaling around 10 billion shekels.
- El Al and Doral Energy anticipate net selling from tracking funds despite their index upgrade.
- Exiting TA-35 companies like Demari and Shufersal are expected to see net buying demand from tracking funds.
- A new mechanism will gradually introduce new stocks to major indices to reduce volatility.
The Tel Aviv Stock Exchange announced on October 15 that El Al Israel Airlines and Doral Energy will be added to the TA-35 index, the market's flagship index, effective November 5. This marks the first time both companies will be included in the TA-35. Concurrently, Y.H. Demari, Shufersal, and Cannon will be removed from the TA-35 and moved to the TA-90 index. The index rebalancing is expected to involve transactions totaling approximately 10 billion shekels.
Doral Energy secured its spot with an average market cap of 11.55 billion shekels, driven by gains in green energy stocks. El Al, with a market cap of 11.05 billion shekels, was a last-minute addition following a surge in its stock after an attempted attack on a Flydubai plane. The companies exiting the TA-35 are Y.H. Demari (7.97 billion shekels market cap), Shufersal (9.56 billion shekels), and Cannon (9.84 billion shekels). Y.H. Demari was affected by a slowdown in the residential real estate market, Shufersal by weak second-quarter reports, and Cannon by a weak OPC stock and negative investor reaction to a new investment.
Shufersal's move to the TA-90 is its second removal from the TA-35 in recent years. The index update also saw Energix and Fattal Hotels, which had vied for a spot, remain outside the TA-35. The TA-90 index will see additions including Tidhar, Avisror, and Bagira, alongside Telsys and Afcon Holdings. Electra Real Estate, Nassiym Vebinvan, and Sela Real Estate are among those exiting the TA-90, impacted by weakness in office and rental housing sectors in the US. Aest Industries, Qualito, Akerstein Group, and Gilat will also be removed from the TA-90.
In a notable precedent, Best Group was excluded from the TA-90 despite meeting market cap requirements due to failing to meet liquidity standards, and will instead move to a growth index. This update will also test a new mechanism designed to mitigate volatility around index inclusions. New stocks entering the main indices, if not previously in the TA-125, will initially receive a reduced weight factor of 0.25, increasing to 0.5 in February and fully removed in May. This phased approach aims to spread demand over three periods, reduce sharp fluctuations, and protect investors' funds in tracking funds. This rule does not apply to stocks moving directly between the TA-35 and TA-90.
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