Tel Aviv Stock Exchange Ends October With Declines, But Foreigners Buy Billions
Translated & summarized from Ice by baba
The Tel Aviv Stock Exchange experienced declines across most indices in October, with the TA-35 index down 3.45%. Despite the downturn, foreign investors purchased 920 million shekels in stocks, and local institutions bought 1.13 billion shekels. The bond market saw rising government yields but active corporate fundraising, totaling 14.1 billion shekels. Mutual funds attracted 7.8 billion shekels in net inflows during October.
The story in 6 lines · by baba
- Foreign investors bought 920 million shekels in Israeli stocks during October's market downturn.
- Local institutional investors purchased 1.13 billion shekels in stocks, focusing on major tech firms.
- Israeli corporations were the main sellers, divesting 3.55 billion shekels in net stock sales.
- The TA-35 index fell 3.45% in October but remains up 11.77% year-to-date.
- Companies and banks raised 14.1 billion shekels in the corporate bond market.
- Mutual funds saw net inflows of 7.8 billion shekels in October, reaching 61.4 billion year-to-date.
The Tel Aviv Stock Exchange concluded October amidst significant uncertainty, influenced by the US midterm elections, Israeli government formation efforts, and ongoing regional risks. Despite widespread index declines, substantial buying activity from foreign and institutional investors was noted.
The main indices experienced drops in October, with the TA-35 index losing 3.45% and the TA-125 index falling 3.42%. However, both indices still show positive year-to-date returns of 11.77% and 7.44% respectively. The TA-90 index declined 3.12% in October and is down 6.10% for the year. Smaller stocks were hit hardest, as the TA SME60 index plunged 8.65% in the month. Sector-wise, insurance, finance, technology, construction, and banking indices saw decreases, while oil and gas and software indices posted gains.
A key trend was the significant net purchase of shares by foreign investors, totaling approximately 920 million shekels. This buying was particularly strong in the three trading days following the elections, with foreign investors acquiring about 439 million shekels in stocks, including 235 million shekels in bank stocks alone. Local institutional investors, including pension funds, provident funds, and insurance companies, also purchased shares worth a net 1.13 billion shekels. Portfolio managers also increased their holdings, buying 682 million shekels in stocks. Israeli corporations were the primary sellers, divesting 3.55 billion shekels in net stock sales. Institutional investors focused their purchases on companies like Elbit Systems, Tower, Nova, and Next Vision.
In the bond market, Israeli government bond yields rose, with the 10-year government bond yield increasing from 4.031% to 4.1566%, contrasting with a decrease in US yields. Long-term government bonds were particularly weak, with the Tel-Gov-Linked 15+ index dropping 2.0%. The corporate bond market, however, was active, with companies and banks raising a total of approximately 14.1 billion shekels. Banks and financial instruments accounted for about three-quarters of these fundraising efforts, with Bank Leumi raising 4 billion shekels and Discount Bank raising 1 billion shekels. They also raised an additional 1.83 billion shekels through commercial paper.
The mutual fund industry saw net inflows of about 7.8 billion shekels in October, bringing year-to-date inflows to 61.4 billion shekels. Assets under management in the industry grew by 13.5% year-to-date to approximately 853.8 billion shekels. Passive funds, especially ETFs, attracted the largest share of inflows (5.2 billion shekels), while active funds raised 2.6 billion shekels. Money market funds continued to be popular, attracting 3.9 billion shekels.
