Investec General Bank

, the Israeli arm of the South African banking giant Investec, has crowned

Koor Industries

(Nasdaq:KOR) its favorite holding company for 2001.

The reason for the choice lies in the bank's belief that Koor's share price will be linked to the price of the global chemicals industry market.

But the bank adds that this correlation will be possible only after investors understand that Koor shares and the TA-100 index of the Tel Aviv Stock Exchange are not closely related.

The bank's analysts say that Koor's portfolio consists of 30% chemicals and 60% hi-tech. Its major chemicals holding is the TASE-traded Mahkteshim-Agan, and its chief hi-tech assets are the

ECI Telecom

(Nasdaq:ECIL) group,

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, and

Elisra Electronic Systems


The bank believes that Koor shares are traded at an excessive discount compared with the net value of its assets. The economists say that Koor stock should trade at a discount in the range of 5% to 15%, while today it trades at a discount of 39% to 40%.

The analysts say that Israel's big holding companies are suffering from the general market slump, and their shares have lost the protective features characteristic of holding companies. For instance, Koor, TASE-traded Discount Investment Corporation and Clal Industries and Investments reported 2000 returns lower than the average yield of companies listed on the TA-100. The bank believes that the major holding companies will continue trading at an excessive discount.

The bank explains that holding companies became scorned because of the rise of the New Economy and hi-tech, and because Israel's marketplace has been exposed to the international market.

But as reality came back into focus, wide-ranging holding companies tightened focus to clusters. Discount Investment Corporation specializes in telecoms, Clal focuses on venture capital funds, the


(Nasdaq:FORTY) group targets software, and the Israel Corporation favors resources. The analysts caution though that the performance of holding companies should be assessed against their target sectors.