Last Sunday, the Tel Aviv stock exchange suffered a sharp nose-dive following Standard & Poor’s downgrading of US credit ratings from AAA to AA+ before stabilizing on Monday. Sunday registered as the worst day on the exchange since the collapse of Lehman Brothers. Discount Investments loses 17.5%, Africa Israel tumbles 16%, Fishman’s JEC weakened by 12%, Tshuva’s Delek Group slips 8% and Israel Corporation under Ofer family sheds 6.5%.
By 10:30 am on Monday, the TA-25 was back up to 2.45 percent. The TA-100 climbed 2.44 percent and the blue tech 50 added 2.55 percent.
Last week’s tailspin was exaggerated by the United States raising of their debt ceiling. As a result, US treasury bonds are now not the safest investment in the world.
Riding the dismal wave, the Tel Aviv Stock Exchange benchmark TA-100 index fell 9% over the last 10 days and is 16% below its peak level from January.
As a result of last week’s sliding, the shekel was down 0.62% against the US currency to NIS 3.542/$, and dived 2.22% against the euro to NIS 5.089/€.
While G7 leaders promise to restore stability to global markets Bank of Bank of Jerusalem (TASE: JBNK) thinks the dollar’s potential to continue strengthening against the shekel is limited at best, and influenced by the political and economic uncertainty and concern about growth on global markets.
The Bank of Jerusalem holds that while the dollar may continue to strengthen in the coming days, it is only a temporary strengthening bound to end when calm return to the markets. The Bank of Jerusalem wrote in its daily survey, “The dollar will reach a stronger resistance threshold at NIS 3.55/$ and crossing it will be a serious obstacle, but we do not rule out this happening.”
Ami Ginsburg of Haaretz offers a list of concerns for local investors:
1. Fears the U.S. is bound for another recession
2. The European debt crisis is getting worse
3. Worry over growth slowdown for developing countries
4. The possibility that social protest signals a crisis
5. Harm to Israeli exports
6. Israel’s rising risk premium from the wave of debt settlements
7. Fear of economic sanctions following declaration of Palestinian state