The Knesset Finance Committee is meeting today to discuss the situation in the Tel Aviv Stock Exchange (TASE), in the shadow of the severe crisis in the Israeli capital market, which manifests itself in low trading volumes, the delisting of companies, and the departure of executives, including chairman Saul (Sam) Bronfeld and CEO Ester Levanon.
Israel Securities Authority chairman Shmuel Hauser is present at the meeting.
"The Israeli stock market is going through a great shock. This may be a bubble within the Israeli economy, and we need to give it serious thought. This is an attempt to jump start such thinking, and to understand the reasons why we have reached this situation, and most of all, what should happen in the future. I know that there are various committees on this subject, but it is hard to provide the right medicine if you don’t recognize the disease. I will not hesitate to makes changes in legislation too," said Finance Committee chairman MK Nissan Slomiansky (Habayit Hayehudi) in his opening remarks.
Hauser said, "The TASE is a national resource and its role has been forgotten. I am very concerned about the TASE's situation. It is a source of financing for business activity, especially in the present time, when we have to make every effort to stimulate growth. The TASE is so important that we should all make every effort to help its success. If we do not change our attitude about the TASE's importance as a lever for growth, we are liable to find ourselves facing huge problems.
"In the absence of the TASE, growth and jobs are harmed. The TASE is drying up, primarily because of economic problems in Israel and the world. We're seeing trading volumes falling in many Western stock markets. The TASE's problems must not be seen as a cold that will go away. We need a change in attitude toward the TASE, and this change applies to everyone: companies, entrepreneurs, controlling shareholders, and the public should also think about it. Both the TASE and the regulators need to relate to this."
Hauser said, "We need regulation to protect investors, but we have to be careful about over-regulation that is liable to harm the market."
Bronfeld told the Finance Committee, "Everything that the TASE chairman said about the national importance of the TASE is true. People don’t notice the fact that, in the past year, NIS 120 billion was raised on the TASE, not in shares, but in bonds. The questions are why is not possible to raise equity, what has happened to the stock market, why is no one buying and selling, why is turnover falling?
Bronfeld explained, "Daily turnover is around NIS 1 billion, but thanks to the latest technological upgrades, we can even handle NIS 10 billion. The question should therefore be, where have the capital market players gone? Gentlemen, the problem is elsewhere, not in the TASE. We're not in an attractive place for investors, and I'm not talking about the geopolitical environment. Nonetheless, we should not despair and throw up our hands, there is a lot that we can do, even if we will not become an international financial center."
Published by Globes [online], Israel business news - www.globes-online.com - on July 31, 2013
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