The Tel Aviv Stock Exchange (TASE) had a mixed start to December, with indices continuing to lack direction, taking their lead from events in the US, says Bank Hapoalim (LSE: 80OA; TASE: POLI) in its latest market review.
The Bank Hapoalim analysts note that December is usually a good month for the market, with the Tel Aviv 25 Index recording negative returns just twice in the last 15 years, in 2002 and in 2006. In all the other years, including those in which the market turned in a poor performance, the indices actually rose in December.
The analysts repeat their earlier assessment that the market's behavior is dictated first and foremost by that of global markets and believe this is set to continue for the foreseeable future, which is why the risk on the markets is now at its peak. An indication of this can be seen in the restrained (if any) response by investors to good news, as opposed to the far more erratic response to bad news.
The recent round of third quarter results highlighted the disappointing performance by many companies, a performance which, say the analysts, is likely to be repeated in the fourth quarter results, which will be released in February-March 2009. That said, they still believe that there are shares whose prices have fallen low enough for investors to earn a profit on them in the long-term. However, given the current level of risk in the market, the analysts feel that even shares like these would make a suitable investment opportunity only for long-term investors who can cope with acute volatility even if it lasts for months.
Turning to the foreign currency market, the Bank Hapoalim analysts note that the shekel weakened against the dollar last week, parallel to the latter's strengthening against most other leading currencies, save for the euro against which it remained largely unchanged.
The analysts believe the shekel will continue to see mixed trading in the near future, although this will be determined, first and foremost, by events on markets overseas. Nevertheless, factors such as the decrease in the current account surplus, the economic slowdown in Israel and the daily foreign currency purchases by the Bank of Israel support the weakening of the shekel against the dollar, the Bank Hapoalim analysts add.
Published by Globes [online], Israel business news - www.globes-online.com - on December 7, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008