www.bethelfinance.com
Israeli stocks traded in New York fell, with the Bloomberg Israel-US 25 Index dropping to the lowest in a week, on concern a general strike in Israel would shut down the stock exchange, preventing arbitrage trading.
The strike, which shut the bourse, banks, ports and most government offices, began at 6 a.m. after overnight talks between the Finance Ministry and the country’s largest labor organization failed. The gauge of the largest Israeli companies traded in the U.S. fell 0.8 percent to 92.29 yesterday, lagging behind the Standard & Poor’s 500 Index’s 0.2 percent increase. Teva Pharmaceutical Industries Ltd., the world’s largest maker of generic drugs, led declines, dropping 1.2 percent to $44.81.
Stocks retreated on concern investors won’t be able to trade the spread between prices in Tel Aviv and New York. Israel has about 60 companies traded on the Nasdaq Stock Market, more than any country outside the U.S. after China, and more than half of them are dually traded.
“With this strike there’s a heightened risk for investors that are trading the arbitrage between the two markets,” Chaim Fromowitz, the head of the private banking division at New York- based Bank Leumi USA, a unit of Israel’s largest lender by assets, said yesterday. “One side may not be there.”
Trading on the TASE, as the exchange in known, was delayed on Nov. 7 after Israel’s National Labor Court ordered a general strike that began at 6 a.m. to end at 10 a.m., cutting short the labor action that threatened to close the bourse. The National Labor Court has instructed the two sides to appear at a hearing in Jerusalem at 2 p.m.
‘Sensitive Situation’
About 250,000 Israelis employed through contractors receive on average 30 percent less in pay than comparable workers that are directly employed, according to the labor group. The Histadrut is calling on the government to take stronger action to have them hired directly so they receive better wages and benefits.
“The Israeli economy is in a sensitive situation, and this is not the time to endanger the stability we have achieved with great effort and the cooperation between the government and the Histadrut in the face of the global economic crisis,” Prime Minister Benjamin Netanyahu said yesterday, according to a text message sent by his office.
The Bank of Israel, led by Governor Stanley Fischer, lowered the benchmark rate by 25 basis points, or 0.25 percentage point, at the end of January to 2.5 percent, the third cut in five months. The reduction was needed because the European debt crisis remains a threat to domestic growth, the bank said. Exports make up about 40 percent of Israel’s economy and Europe is one of the country’s largest markets.
Economic Damage
“It’s difficult to quantify the damage to the economy, which I think is biggest for importers, exporters and tourism,” said Jonathan Katz, a Jerusalem-based economist at HSBC Holdings Plc. “If it is just a strike for one day, it is not that detrimental to Israel’s image. If it will be a prolonged strike, it will have investors worried.”
Tel Aviv’s benchmark TA-25 Index was little changed yesterday, rising less than 0.1 percent to 1,117. The shekel gained 0.4 percent to 3.6986 a dollar at 11:39 a.m. in Tel Aviv.
Allot Communications Ltd., the Israeli maker of high-speed networking equipment, dropped 4.6 percent to $17.13 yesterday after its Tel Aviv shares surged 8.3 percent to 67.50 shekels, or the equivalent of $18.18.
The company said yesterday that fourth-quarter profit almost tripled as it added new customers.
‘Stock to Go Up’
“Part of the problem is that they won’t give guidance,” Jay Srivatsa, an analyst Chardan Capital Markets LLC, said from New York. “I expect the stock to go up when the dust settles.”
EZchip Semiconductor Ltd., the Yokneam, Israel-based maker of network processors, gained 1.2 percent to $33.47 in U.S. trading. The Tel Aviv shares fell 2.2 percent to 123.80 shekels, the equivalent of $33.33.
The company will probably report earnings of $1.07 per share for 2011 today, up 14 percent from 94 cents in the previous year, according to the median estimate of eight analysts surveyed by Bloomberg.
Increased capital spending at phone carriers such as AT&T Inc., Verizon Communications Inc. and Sprint Nextel Corp. will boost orders for companies such as EZchip, Gary Mobley, an analyst at Benchmark Co., said by phone in New York yesterday.
“Eventually that’s going to create a more buoyant environment for EZchip,” he said.
Perrigo Co., the largest U.S. maker of generic over-the- counter drugs, advanced 1.3 percent to $95.26 after its Tel Aviv shares surged 6.3 percent to 365.70 shekels, or the equivalent of $98.45. The $3.19 discount for the U.S. stock was the largest among dually traded companies.
The drugmaker reported fiscal second-quarter profit that exceeded analysts’ estimates and raised the low end of its outlook for the year.
No comments:
Post a Comment