Tel Aviv Stock Exchange Sees Over 7 Billion Shekels in Trades Amid Index Rebalancing
On Thursday, August 6, the Tel Aviv Stock Exchange will experience one of the summer's largest trading events due to its quarterly index rebalancing. During the closing auction, exchange-traded funds (ETFs) are expected to place buy and sell orders totaling more than 7 billion shekels. The highlight of this update is the inclusion of Palo Alto Networks shares into the TA-35, TA-125, and technology indices, generating demand estimated at around 800 million shekels.
Palo Alto Networks will join the indices through a fast-track process reserved for the top 100 largest stocks in the Rimon database. Initially, its weight in the TA-35 and TA-125 indices will be capped at 1.25%, increasing to 2.5% in November and 5% in February, subject to index rules. The combined weight of Palo Alto and Ormat Technologies, both with American ISINs, will be limited to about 8% to avoid U.S. regulatory constraints, with Palo Alto capped at 5% and Ormat at 3%.
Unlike the May and November updates, this August rebalancing does not involve changes in index membership except for the fast-track addition. Most changes stem from adjustments in stock weights due to factors like liquidity tiers, public float, and the number of shares available for trading. The liquidity tiers, calculated based on median liquidity and turnover speed over the six months before the July 16 cutoff, have caused many stocks to move up a tier, increasing demand for those shares.
In total, 22 stocks are expected to see buying interest exceeding 10 million shekels due to liquidity tier upgrades, while only three stocks may face selling pressure from tier downgrades. Stocks unaffected by parameter changes may still experience selling pressure as their relative weights decline. These index updates significantly influence stock prices, often well before the official adjustment date, as institutional investors and arbitrageurs prepare for the changes. Full tables of expected supply and demand for affected stocks will be published on Calcalist's website.
