El Al and Doral Energy to Join Leading TA-35 Index, Triggering Billions in Fund Trading

Israel's benchmark Tel Aviv 35 stock index is set for a significant reshuffling in early November, with El Al Airlines and Doral Energy slated for inclusion. They will replace Damari, Shufersal, and Canon, which will move to the Tel Aviv 90 index. This change will necessitate billions of shekels in buying and selling by exchange-traded funds (ETFs) and tracking funds as they adjust their portfolios to the new index composition, potentially causing sharp stock price fluctuations. While inclusion in a leading index generally boosts a company's exposure, some anticipated demand may already be priced in. The index will return to its intended 35-stock count after a temporary inclusion of 36 stocks. Doral Energy, a renewable energy firm, joins with an average market cap of approximately 11.55 billion shekels, driven by expansion in the U.S. and significant renewable energy projects. Despite current losses due to investment costs, the company projects substantial revenue growth. Its recent profitability surge is a key factor, though future performance may be impacted by increased competition and rising fuel costs. The article notes that Damari, Shufersal, and Canon face challenges including a slowdown in the housing market, intense competition in the food sector, and performance of their respective holdings. A new mechanism will gradually integrate new companies into the TA-125 index to mitigate sharp price swings, but El Al and Doral's transition to the TA-35 will follow standard procedures.