Israeli Markets Brace for Declines Amid Global Trends; Zaim Buys Back Stake

The Tel Aviv Stock Exchange is expected to open negatively on Tuesday, mirroring declines on Wall Street and in Asian markets overnight. Tower Semiconductor is anticipated to be a notable underperformer, with its shares predicted to drop over 5% at the opening, despite a 110% increase over the past year. The Israeli shekel continued to weaken against the dollar. Businessman Rani Zaim is reacquiring a significant stake in his shopping mall company, Rani Zaim Malls, purchasing 7.5% of the shares from the Hagege Real Estate group for 75 million shekels. This transaction values the company at 1 billion shekels, a premium of about 30% over its market price, though it aligns with the company's book value. Zaim also secured an option to buy an additional 7.5% at a higher price, which could lead to the end of joint control with Hagege. The deal serves different interests: Hagege aims to realize part of its investment, reduce debt, and free up cash, while Zaim seeks to increase his exposure to the company's developing assets and future growth, potentially regaining control. Hagege, which initially invested approximately 195 million shekels when Zaim faced difficulties, will retain about 22% of the company after the initial sale. Meanwhile, a Bank of Israel survey indicates a further decrease in demand for credit from construction and real estate companies in the third quarter, with banks increasing their lending margins for these firms. Conversely, banks are easing credit conditions for small businesses and households seeking consumer loans. The defense company Third Eye is experiencing a market correction, with its stock falling 3.7% after recent positive momentum. This follows reports of potential deals, including memorandums of understanding with U.S.-based Aelyon for developing autonomous systems, with a stated potential for up to $40 million in orders, contingent on the American partner's fundraising and product sales. The company also reported a follow-on order of approximately 5.2 million shekels from a defense client, which remains cancelable, and a memorandum of understanding with a European defense manufacturer for equipping hundreds of systems by 2029. These potential deals carry significant caveats regarding financing and sales.