Economic uncertainy, violence allowed TASE mild gains Thursday

Tel Aviv stocks closed up 0.4% Thursday. Market sources estimate that current share prices factor in the ongoing political and economic uncertainty and leading indices are unlikely to change in the short term.

The Maof-25 blue chip index closed up 0.4% to 392.7 points, the TA-100 index closed up 0.4% to 3791.1 points, and technology shares edged up 0.1%. Total turnover was a low NIS 164 million.

Market players believe the market has demonstrated resilience recently in the face of ongoing fighting between Israel and Palestinians, and in light of the planned NIS 10 billion emergency economic plan. Stocks closed with mild gains on Wednesday.

One player estimated that speculators account for most of the action in recent days, rather than institutional or private investors. Household investors would have indicated a significant change in market behavior, the player said. He believes that the market currently involves low levels, as indicated by the low share prices of holding firms such as Koor Industries (NYSE:KOR) or Clal Industries, which are trading 30% to 40% below their net asset value. This is in line with recent analyst estimates valuing leading banks, Bank Hapoalim and Bank Leumi, and Israel Chemicals above their market prices.

The player added that present stock levels constitute opportunities for investors with long-term orientation, enabling them to gradually increase the portfolio share component.

Investment bank DBM CEO Rami Dror said that investors are largely motivated by the need for liquidity in the face of political and economic uncertainty, and given that a short trading week lies ahead. The Tel Aviv Stock Exchange will be closed next Tuesday, Memorial Day, and on Wednesday, Independence Day.

There is much uncertainty of late on the market that relates to the plans of the treasury to make additional budget cuts and to impose new taxes and levies to cover rising defense spending. Neither the treasury nor the government have yet agreed on a uniform policy, and reports say that the treasury is itself divided on the required measures, mainly on the need for new taxes and a compulsory war loan.

Dror estimates that activity in the short term will mostly be in blue chips, in order to allow high liquidity.

Dror expects that shekel instruments, namely long-term treasury bonds, will attract action in the short term, given reports the government is planning to cut the budget by NIS 10 billion. Dror estimates that should the cut be implemented, the central bank won't have to continue raising interest rates.

Long-term treasury bonds closed with 0.2% to 0.4% gains.

Teva Pharmaceuticals (Nasdaq:TEVA) closed up 2% on NIS 27.6 million turnover. Teva received U.S. Food and Drug Administration approval for Fenofibrate capsules, 134 mg and 200 mg, and gave tentative approval for the 67 mg. Teva has been granted 180-day marketing exclusivity. The drug is the generic equivalent of Tricor capsules made by Abbott (NYSE:ABT), used for treating patients with very high triglyceride, blood fatty acids.

CFO Dan Suesskind two weeks ago estimated sales of the original drug in 2001 at $235 million.

Cellular provider Partner Communications (Nasdaq, TASE:PTNR, LSE:PCCD) climbed 4.9% on NIS 5.7 million turnover, after rising 6.2% earlier. The gains relate to reports that cable TV firm Matav Cable Systems (Nasdaq:MATV) is due to sell a 7.6% stake to Hutchison-Whampoa for $60 million to $70 million. This would resolve the Dankner family's cross ownership problem, with control in Matav and, together with the Arison family, control in Bank Hapoalim. In addition, the sale will allow more time for paying back its $98 million credit from Bank Hapoalim.

Matav closed up 0.9% on estimates it will post pre-tax capital gains of NIS 180 million from the sale.

Direct Insurance climbed 2.8% on irregular turnover, NIS 923,000. The gains area attributed to reports the company is in talks with insurance giant AIG to acquiring AIG's activity in Israel. Direct Insurance said that the parties had conducted merely preliminary talks.

Food retailer solutions firm Retalix (Nasdaq:RTLX) closed with 1.5% gains. On Wednesday the company announced that it is likely to meet Q1 targets with over $16 million revenue, and over $1 million operating profit. This prompted Investment bank Ilanot Batucha to rate Retalix a Strong Buy, setting $19 as price target, 63% above the market.

Bank Leumi closed up 0.3% on NIS 16.2 million volume. Bank Hapoalim closed off 1.2% on NIS 12.8 million volume.

IDB Holding Corporation slipped 0.8%, IDB Development Corporation closed up 0.3%, Discount Investments closed up 0.7%. Dror estimated that IDB stock will attract increasing action in view of players seeking liquidity.