Tel Aviv Stock Exchange Surges Amid Election Uncertainty
Translated & summarized from Hamal by baba
The Tel Aviv Stock Exchange experienced significant gains across its main indices this past week, with the TA-35, TA-125, and TA-90 rising despite election-related uncertainty. Institutional investors were net buyers, particularly in technology stocks, while foreign investors were net sellers. Analysts like Tzur Ilan suggest the rallies may be due to buybacks rather than new investment, and caution that the broader TA-90 index indicates underlying weakness. Ilan also questioned the market's sensitivity to election outcomes given Israel's economic strength.
The story in 6 lines · by baba
- Tel Aviv Stock Exchange indices surged last week amidst growing election uncertainty in Israel.
- The TA-35 index leads year-to-date with a 16.3% return, while the TA-90 remains down 2.9%.
- Construction and real estate sectors led the broad-based gains, alongside defense and financial indices.
- Institutional investors were net buyers, focusing on technology stocks, while foreign investors were net sellers.
- Analyst Tzur Ilan suggests gains are from buybacks and warns of underlying weakness reflected in the TA-90 index.
- Ilan questioned the market's reaction to political uncertainty, citing Israel's economic strength.
The main indices on the Tel Aviv Stock Exchange (TASE) saw sharp increases over the past week, despite growing uncertainty surrounding the upcoming Israeli elections. The TASE Research Department reported on Monday that the TA-90 index rose 5.1%, the TA-125 by approximately 4.2%, and the TA-35 by about 4.0%. The TA-35 leads year-to-date with a 16.3% return, while the TA-125 has gained 11.7% and the TA-90 remains down 2.9% for the year.
The gains were broad-based, led by the construction and real estate sectors, with TA-Construction up 9.7% and TA-Real Estate up 9.0%. Defense and financial indices also saw significant rises, including TA-Defense (6.2%), TA-Financials (5.7%), TA-Banks (5.5%), and TA-Insurance (5.2%). The TA-Insurance index has a year-to-date return of 41.7%, and TA-Banks is up 22.7%, though TA-Construction is down 11.5% and TA-Real Estate is down 7.2% for the year.
Average daily trading volume was around NIS 4.7 billion. Institutional investors were net buyers, acquiring NIS 1.3 billion in stocks this past week, bringing their net purchases year-to-date to NIS 5.5 billion. Their primary focus was the technology sector, with NIS 936 million in net purchases, notably in Elbit Systems, Tower Semiconductor, Nova, and Camtek.
Conversely, foreign investors were net sellers this week, offloading NIS 314 million in stocks. However, their net purchases since the beginning of October stand at NIS 416 million, and NIS 3.1 billion year-to-date.
Despite the market's upward trend, some analysts express caution. Tzur Ilan, CEO and Partner at Almandah Capital, stated that the recent gains are not due to new capital but rather investors buying back shares at lower prices after significant sell-offs. He noted that while dual-listed companies, banks, and insurance firms have driven gains, the TA-90 index, reflecting the broader Israeli economy, shows the depth of the damage, suggesting the market is still near its bottom, assuming election results bring certainty.
Ilan also commented on the market's reaction to political uncertainty, finding it less logical compared to other countries like France, which faces significant challenges but has not seen its credit rating downgraded. He believes Israel's economic strength and relative stability should outweigh short-term political concerns, emphasizing that actual economic data ultimately dictates market performance.
