Bethel Finances:Israel ranked 22nd in global competitiveness

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The World Economic Forum (WEF) ranks Israel 22nd in its 2011-12 Global Competitive Report, up two places from last year, and up five places from 2009.

The WEF says that the report comes out amid multiple challenges to the global economy and a continuing shift in the balance of economic activity away from advanced economies and toward emerging markets. Policymakers are struggling to find ways to manage the present economic challenges while preparing their economies to perform well in an increasingly complex global landscape.

Switzerland again topped the rankings of 139 countries, followed by Singapore, which overtook Sweden to take second place. The US continues the decline it began three years ago, falling one more place to fifth place. Japan fell three places to ninth place. Western European countries took the remaining top ten positions, Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th), and the UK (10th).

The report states, "Israel's main strengths remain its world-class capacity for innovation (6th), which rests on highly innovative businesses that benefit from the presence of the world’s best research institutions, geared toward the needs of the business sector. The excellent innovation capacity, which is additionally supported by the government’s public procurement policies, is reflected in the country’s high number of patents (4th). Its favorable financial environment (10th), particularly the solid availability of venture capital (2nd), has further contributed to making Israel an innovation powerhouse; these elements have become stronger in the course of the past year."

The WEF warns, however, "Challenges to maintaining and improving national competitiveness relate to the need for continued upgrading of institutions (33rd) and a renewed focus on raising the bar in terms of the quality of education. If not addressed, poor educational outcomes, in particular in the area of math and science (79th), could undermine the country’s innovation-driven competitiveness strategy over the longer term. As in previous years, the security situation remains fragile and imposes a high cost on business (74th).

"Room for improvement also remains with respect to the macroeconomic environment (53rd), where increased budgetary discipline with a view to reducing debt levels would help the country maintain stability and support economic growth going into the future."

Bethel Finances: Average salary rose 8% in June

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The average gross national salary was NIS 9,124 in June 2011, 8% more than in May, the Central Bureau of Statistics reported today. However, the average salary fell by an annualized 0.3% in fixed prices in the second quarter, after falling by 0.9% in the first quarter.

In current prices, the rise in the average national salary slowed to 2.8% in the second quarter from 4.2% in the first quarter.

There were 3.05 million Israeli salaries employees in June, up from 2.98 million in April. The increase in salaried employees slowed to annualized 1.7% in the second quarter from 2.5% in the preceding quarter. There were 87,000 foreign workers in June, bringing the total number of salaries employees up to 3.18 million. The number of salaried workers rose by 1,500 during the second quarter.

The average salary of foreign workers was NIS 4,553 in June, dragging down the total average national salary to NIS 8,943.

Bethel Finances: Delek Real Estate bondholders postpone payment decision

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Sources inform ''Globes'' that Delek Real Estate Ltd. (TASE: DLKR) Series 5 bondholders have decided to postpone a decision on immediate repayment of the bond until September 18, giving controlling shareholder Yitzhak Tshuva a respite. The Series 5 bondholders are demanding that Tshuva provide equivalent guarantees to the ones that he provided the Series 25 bondholders.

The Series 5 bond is a long-term bond and the Series 25 bond is a short-term bond. The Series 5 bond is Delek Real Estate's largest debt, amounting to NIS 1.4 billion. The principle is due to be repaid in monthly installments in 2013-19 and the interest payments are repaid in two installments a year, in February and August. The company did not pay the interest payment due last month.

Meanwhile, Delek Real Estate is in talks to finalize the sale of Thsuva's 55% stake in the company to US private equity fund CIM Group Inc.. Under the letter of intent signed by the companies in August, CIM will inject NIS 500 million into Delek Real Estate in the form of a subordinate owners' loan. Tshuva has agreed to provide a NIS 100 million owners' loan.

Delek Real Estate's share price rose 3.7% in morning trading to NIS 0.195, giving a market cap of NIS 73 million.

Bethel Finances: Shekel weakens as markets wait for Obama

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The shekel is weakening slightly in morning inter-bank trading today. The shekel-dollar exchange rate is up 0.14% to NIS 3.678/$ and the shekel-euro exchange rate is up 0.13% to NIS 5.17/€.

Yesterday the Bank of Israel set the shekel-dollar representative exchange rate up 0.47% to NIS 3.673/$, and the shekel-euro representative exchange rate down 0.50% to NIS 5.164/€.

In international markets today, the dollar rose 0.24% against the euro to $1.406/€, and is trading at ¥77.37/$ against the Japanese yen.

Traders are waiting for US President Barack Obama to unveil his $300 billion jobs plan. Federal Reserve Board Chairman Ben S. Bernanke is scheduled to speak today about the Fed's options to support the economy.

Bethel Finances: Tel Aviv 25 down 6.1% on week

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The Tel Aviv Stock Exchange (TASE) fell today. The Tel Aviv 25 Index fell 0.90% to 1,062.78 points, the Tel Aviv 100 Index fell 0.73% to 954.16 points, but the BlueTech 50 Index rose 0.68% to 245.47 points. Turnover was NIS 1.43 billion.

The Tel Aviv 25 Index fell 6.1% in a particularly volatile week that included a 9% drop over three consecutive days.

Israeli and global investors today listened to remarks by European Central Bank President Jean-Claude Trichet, who kept the ECB interest rate unchanged at 1.5%. They are waiting to hear US President Barack Obama unveil his $300 billion jobs program and whether Federal Reserve Board Chairman Ben S. Bernanke will announce new stimulus measures.

Meanwhile, Governor of the Bank of Israel Prof. Stanley Fischer said that he does not expect a global recession - at least for now.

In the foreign currency market, the shekel-dollar representative exchange rate rose 0.22% to NIS 3.681/$, and the shekel-euro representative exchange rate rose 0.17% to NIS 5.172/€.

In the bond market, long-term Shahar unlinked government bonds rose by up to 0.2%, and long-term Galil CPI-linked bonds ranged between losses of 0.1% and gains of 0.1%. The corporate bond benchmark Tel-Bond 20 Index fell 0.64%.

In the stock market, real estate company Gazit-Globe Ltd. (TASE: GLOB) fell 5.4% for the biggest loss among Tel Aviv 25 shares, without making any announcement.

Israel Corporation (TASE: ILCO) and Israel Chemicals Ltd. (TASE: ICL) broke their severe losing streak, rising 0.9% and 0.7%, respectively. Israel Chemicals had the day's biggest turnover, at NIS 144 million.

Delek Drilling LP (TASE: DEDR.L) rose 1.6% for the biggest gain among Tel Aviv 25 shares, and Avner Oil and Gas LP (TASE: AVNR.L) rose 0.1%, but their parent company, Delek Group Ltd. (TASE: DLEKG), fell 2.3%.

Banks continued to fall, and the Banking Index has lost 30% since the beginning of the year. Bank Hapoalim (TASE: POLI) fell 1.5%, Bank Leumi (TASE: LUMI) fell 0.6%, Israel Discount Bank (TASE: DSCT) fell 1.2%, and Mizrahi Tefahot Bank (TASE:MZTF) fell 1.4%.

Bethel Finances: Drahi halves Mirs price

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Sources inform ''Globes'' that HOT Telecommunication Systems Ltd. (TASE: HOT) controlling shareholder Patrick Drahi has offered a new format for its acquisition of his company Mirs Communications Ltd. - halving his original NIS 1.3 billion asking price. HOT's general shareholders meeting to approve the controversial deal has been rescheduled and will take place within two weeks.

Institutional investors in HOT oppose its acquisition of Mirs on the grounds of the exorbitant asking price, double what Drahi paid for the company when he bought it from Motorola last year. Drahi is now asking an initial NIS 500 million for Mirs (NIS 750 million net of Mirs' debts) - similar to the price he paid for it.

Drahi is eligible for additional payments, subject to HOT meeting earnings before interest, taxes, depreciation and amortization (EBITDA) milestones over the next few years and Mirs's market share. He has sent the new proposal to the institutional investors' advisor, Entropy Consultants Ltd., which will suggest how they should vote.

HOT attributed the difference between Drahi's asking price for Mirs and the price he paid for it to the company's win in the Ministry of Communications mobile carriers tender earlier this year. HOT commissioned TASC Strategic Consulting Ltd. to value Mirs for the merger, and it set a company value of NIS 1.05 billion.

However, an independent consultant, David Solomon's DS Analysts Ltd., estimated Mirs' fair value at just NIS 450-500 million.

HOT's institutional investors told the company's chairwoman Stella Handler that they demanded a reduction in price for Mirs and the setting of milestones for payment.

Capital market analysts were astonished at Drahi's asking price for Mirs following TASC's valuation in July. DS Apex VP research Eran Jacobi said that the price was crazy and questioned the valuation's assumptions. Migdal Capital Markets analyst Amir Adar advised that the deal should only be approved if the price was cut to NIS 813 million and payment was based on milestones.

HOT's shareholders will meet on September 19 to vote on the Mirs acquisition. As a party at interest, Drahi cannot vote. A majority of disinterested shareholders must vote in favor, or, alternatively, the number of opponents among disinterested shareholders must not exceed 2%.

Drahi owns 51.7% of HOT through Cool Holdings Ltd. and he owns 100% of Mirs. Other HOT shareholders include Yediot Communications Ltd. (16.5%) and Fishman Holdings (6.5%). Drahi has an agreement to buy Yediot's stake for NIS 650 million, which may mean that Yediot will be considered a party at interest for the purposes of the Mirs vote.

This means that HOT's institutional investors have added weight in the shareholders' vote, even though none of them has a substantial holding in the company. Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) are two of these investors.

HOT's share price rose 2.4% to NSI 46.09 today, giving a market cap of NIS 3.5 billion.

Bethel Finances: Noble Energy to ignore Turkish threats on Cyprus

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Noble Energy Inc. (NYSE: NBL) says that it will push ahead with its Cypriot offshore exploratory well at Block 12, in spite of warnings from Turkey not to do so. Block 12 adjoins Israel's Leviathan field.

The "Cyprus Mail" says Cyprus is stuck between a rock and a hard place in the Turkish-Israeli dispute. If President Demetris Christofias chooses to push ahead with drilling, he is essentially calling Turkey’s bluff. Failure to do so effectively acknowledges Turkey’s dominion over the island.

"Cyprus Mail" says that the heightened tension between Israel and Turkey comes on the back of repeated warnings by Turkish officials against Cyprus drilling in its exclusive economic zone. While some commentators believe the feud with Israel may be used as a pretext to build up naval patrols in seas between Israel and Cyprus, at a time when both latter countries are discussing collaboration on the extraction and distribution of hydrocarbon deposits in their respective marine zones, the paper says that current diplomatic thinking in the region is that Turkey has more important issues to contend with than create serious problems for the island.

Energy Service head Solon Kassinis told the "Cyprus Mail" that he expects drilling to start before October 1. Noble Energy will use the Homer Ferrington rig currently drilling in the Noa field offshore from Ashkelon in Israel’s exclusive economic zone.

Kassinis said, “I expected Turkey to bark but I don’t think they will do anything because what we’ve done is based on international law, and if they want to be considered a country that respects international law, when it has a network of (oil and gas) pipe lines, charging transit fees, how can it?"

Kassinis added that any fears from Noble Energy have been assuaged by the US Embassy in Nicosia which has told the company to go ahead and expedite the exploration process.