Hapoalim chief economist: More appetite for risk

The top gainer on the Tel Aviv 100 Index rose 1,656% this year.

"Capital markets are starting 2010 with their best foot forward, and there is economic justification for it. Stock pricing experts note that current multiples are reasonable, and there is no bubble. The global stock multiple is 15, which is a historic average," said Bank Hapoalim chief economist Leo Liederman.

Liederman added, "With the improvement in the economic situation, and the very low returns on bond instruments, more and more investors are showing greater appetite for risk. This is primarily seen in the stock market. There's optimism, and returns on alternative investments are low.

"Whereas six or more months ago, conventional wisdom among investors held that cash was king, cash is now clearly not the king, and investors are taking on more risk, especially in the stock market."

The reviews of 2009, a year of recession in Israel and the world will begin next week. Israel's unemployment rate reached 7.8%. While the Tel Aviv Stock Exchange (TASE) initially plummeted, it subsequently seemed to be ahead of the economic curve, beginning a rally in March.

The gainer so far this year among Tel Aviv 25 shares is Delek Group Ltd. (TASE: DLEKG), which rose 543% in 2009. The winner among Tel Aviv 100 shares is Delek Group's partner in Israel's offshore natural gas discoveries, Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L), which rose 1,656%.

Israel Discount Bank (TASE: DSCT) rose 174% in 2009, Bank Leumi (TASE: LUMI) rose 120%, and Bank Hapoalim (TASE: POLI) rose 100%.

Liederman says, "The changes in the TASE reflect changes in the global economy and foreign stock exchanges. Israel is not unique. Prices on Wall Street are at 52-week highs, and the same is true in other stock markets."

Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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