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Thursday, April 8, 2010

Israeli Stocks Climb to Record as Growth Accelerates

Israeli Stocks Climb to Record as Growth Accelerates (Update3)

By Ronit Goodman

April 6, 2010  (Bloomberg) -- Israel’s benchmark stock index advanced to a record high on speculation accelerating economic growth will lead to rising corporate earnings.

The TA-25 Index climbed 0.4 percent to close at 1,237.85 in Tel Aviv, surpassing the previous record of 1,237.13 on Oct. 31, 2007. The gauge reached an intraday high of 1,242.39. The benchmark’s record intraday level was 1,248.8 on Nov. 1, 2007.

“The economy will remain strong and continue to positively impact companies’ results and, therefore, positively impact the equity market,” said Yaron Fridman, equity strategist at Bank Hapoalim Ltd. in Tel Aviv.
The gauge of Israel’s 25 largest companies has more than doubled from a 2008 low, driven by energy shares such as Delek Group Ltd. Benchmark indexes in Sri Lanka, Tunisia, Chile, Colombia, Mexico, Indonesia and Turkey also have bounced back to all-time highs since the global bear market ended in March 2009. 

Aggregate revenue of companies in the TA-25 index grew about 20 percent in the fourth quarter while profit soared 1,230 percent, Fridman wrote in a March 25 report.

Perrigo Co., a manufacturer of store brand over-the-counter pharmaceuticals that carries a 9.5 percent weighting in the index, gained 2.3 percent today. The company received U.S. Food & Drug Administration approval to market a generic version of a topical acne vulgaris antibiotic marketed by Steifel Laboratories Inc. NICE Systems Ltd., the manufacturer of digital-recording surveillance products that makes up 4.9 percent of the gauge, increased 2.8 percent.

Growing Economy

Israel’s economic growth was 0.7 percent in 2009, compared with a 2.4 percent contraction in the U.S. The Bank of Israel on Jan. 11 raised its 2010 growth forecast to 3.5 percent from 2.5 percent, citing “positive” information on the global and local economies. Bank Leumi Le-Israel Ltd., the country’s largest lender on March 25 increased its forecast for economic expansion to 3.8 percent from 3.5 percent. The unemployment rate fell to 7.4 percent in the fourth quarter, the lowest level in a year, as growth accelerated.

Energy stocks soared after the country’s largest discovery of natural gas was reported in January 2009. Delek Drilling LP and Avner Oil & Gas Ltd., partners in the find in the Mediterranean Sea off Israel’s coast, are up about five-fold since the announcement.

Delek Group, Isaac Tshuva’s holding company that controls about 32 percent of Tamar through Avner and Delek Drilling, has surged more than six-fold.

--With assistance from Michael Patterson in London. Editors: Susan Lerner, Claudia Maedler.