Bourse (vecteezy photography)
The stock exchange published the data summarizing the month of April, which was conducted against the background of the continuing fighting between Russia and Ukraine that began on February 24, 2022 and was exacerbated this month. As a result, sanctions on Russia were extended by the United States, the European Union and the United Kingdom. At the same time, the closure continued in several cities in China following the “zero corona” policy.
The fighting in Eastern Europe and the closures in China are contributing to the continued rise in world inflation. Energy prices Raw materials and food, especially those imported from the countries of conflict, continued to rise this month. Among them: the price of natural gas, which jumped by about 30% this month and completed an increase of about 97% since the beginning of the year, the price of wheat, which rose by about 7% this month and completed an increase of about 40% since the beginning of the year. It should be noted that Brent oil, which remained virtually unchanged this month at a price of $ 105 a barrel, is about 36% higher than at the beginning of the year.
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Following the rise in commodity prices, the annual inflation rate rose, as of the end of March 2022, to 3.5% in Israel – a record from 2009, compared with 8.5% in the US – a 41-year record, 7% in the UK, a 30-year record, and 7.5 % In the eurozone – a record since its inception.
To slow down the rate of inflation, the Bank of Israel raised the interest rate in the economy in April 2022, for the first time since November 2018, by a quarter of a percent low of 0.1% in about two years to a level of 0.35%. This is similar to leading central bank policies such as: the Fed raising interest rates in the US for the first time since December 2018, by a quarter of a percent in March 2022 to 0.5% and is expected to continue to raise it several more times by the end of 2022. Third to 0.75% in March 2022
In the US, the Fed signaled a second rate hike this year, up more than a quarter of a percent in May. Markets responded with price declines and the dollar strengthened.
On the other hand, there was a positive backlash on trade in Tel Aviv for a number of factors: Positive macroeconomic data, including: 4.2% in February 2022. The unemployment rate without temporarily absent from work also decreased to about 3.2% in the first half of March 2022, compared to about 3.7% in February 2022.
The data from the Ministry of Finance show that in the first quarter of 2022, the government had a surplus in its budgetary activity of NIS 23.4 billion, compared with a deficit of NIS 23.3 billion in the corresponding period last year. The decrease in the deficit is due to an increase of about 29% in state revenues compared to the corresponding quarter last year. The cumulative deficit in the last 12 months stands at 1.4% of GDP – the lowest rate since 2008, compared to about 12% in 2020 when .
The Bank of Israel has published an updated macroeconomic forecast, according to which: GDP is expected to grow at a rate of 5.5% and 4.0% in 2022 and 2023, respectively. The unemployment rate will fall over the forecast period, averaging 3.5% in 2022 and 3.4% on average in 2023. The inflation rate is expected to be 3.6% and 2.0% in 2022 and 2023, respectively. The monetary interest rate is expected to stand at 1.5% in a year. The government deficit will constitute about 1.4% and 2.3% of GDP in 2022 and 2023, respectively, and the debt-to-GDP ratio will reach 67% in 2022.
The rating company Moody’s reaffirmed Israel’s credit rating at A1 but raised, for the first time since 2020, the rating outlook from “stable” to “positive”. “A-90 rose by 1.4%, compared with a decrease of about 12% on the NASDAQ, a decrease of about 9% in China and an average decrease of about 4% on leading stock exchanges in Europe.
The TA-35 and TA-90 indices are also prominent compared to other stock exchanges in the summary of the first quarter of the year, following the trend from the previous year, with an increase of about 1% and about 4%, respectively. This is compared to an average decline of about 13% in leading stock exchanges in the world, led by the Nasdaq, which fell by about 20%.
Among the industry indices, the Tel Aviv oil and gas index stood out positively this month, rising by about 6% and leading a 41% increase since the beginning of the year, due to the sharp rise in oil and gas prices and the increase in demand for gas imports from Israel. Insurance, which rose by about 3% in April, has completed a 6% increase since the beginning of the year. This month, there was a decrease in turnover in most of the trade channels, due to the departure of market activists for the Passover holiday.
The daily turnover in the stock market, including mutual funds, amounted to NIS 1.8 billion in April, 32% lower than the turnover in the first quarter of 2022. On April 7, on the eve of the monthly update of the stock indices, a turnover of NIS 3.9 billion was recorded on the stock exchange. About NIS 2.1 billion of them, at the closing stage.
Raisings in the Tel Aviv stock market are expected to amount to NIS 1.5 billion this month, following on from NIS 7.5 billion in raising capital in the first quarter of 2022.
Approximately NIS 69 million was raised through the issuance of shares to the public by the technology company Hilan, and approximately NIS 1.4 million in four private allotments made.
This month the renewable energy company Energy Farm acquired 41% of Dalia Energy, a company that produces and supplies electricity through power plants. In the transaction, approximately 74% of the shares of Mesek Energy were allocated to Dalia Energy shareholders – the “Kibbutz Farms” and others. The value of the shares purchased in the transaction is approximately NIS 1.3 billion. The company’s industry classification differs from the technology – renewable energy industry, to the energy industry and oil and gas – energy exploration industry.
The shares of the income-producing real estate company Overseas Optibase were delisted from trading in Tel Aviv and Nasdaq on April 13, 2222 following a takeover bid by the Kapri Family Fund, which controls the company. Today, 50 dual companies are traded in Tel Aviv.
In the bond market, there were price declines in April in most government and corporate bond indices. The price declines this month were led by corporate bonds included in the Tel Bond index for 5-15 years and government bonds for NIS 5-10 fixed interest rates, which fell by 2% and 1.7% this month, respectively, and by 7% in the first quarter of the year. . NIS 10-year fixed-rate government bonds fell by about 1.3% this month and by the end of the first quarter of 2022 fell by about 11%. The yield on a 10-year fixed-rate shekel government bond rose to 2.4% at the end of April 2022, compared with 2.2% at the end of the previous month, compared with a yield of 1.3% at the beginning of the year. This is similar to the yield on a government bond. US for 10 years and reached about 2.8% at the end of April 2022 compared to about 2.3% at the end of the previous month, compared to a return of about 1.5% at the beginning of the year.
Exceptional are the corporate bonds included in the Tel Bond dollar, which jumped by about 4% due to the strengthening of expectations for accelerating the rate of US interest rate hikes and the strengthening of the dollar, and the bonds included in the index-linked government bond indices of 0-2 years. By about 0.3%. There was a decline in activity in the bond market this month, and the daily turnover in bonds amounted to NIS 2.4 billion – 34% lower than the average turnover in the first quarter of 2022. The decrease in trading volumes was mainly due to shekel government bonds, with a daily turnover of NIS 1 billion. In April alone, compared to about NIS 1.8 billion in the first quarter of 2022.
In short-term lending, the daily turnover amounted to NIS 0.5 billion – similar to the average turnover in the first quarter of 2022. Raisings in the Tel Aviv bond market by the Treasury in April amounted to NIS 2.9 billion, compared with an average of NIS 4.7 billion each. From January to March 2022. About 73% of the amount raised this month was made through fixed-rate shekel bonds, and about 27% of the amount raised through index-linked bonds.
Raising public offerings and private allocations in the Tel Aviv bond market by the business sector are expected to total NIS 6 billion in April, following NIS 24 billion raised in the first quarter of the year. NIS 5.5 billion was raised this month in 11 issues To the public and about NIS 0.5 billion were raised in five private allocations.
NIS 3.7 billion was raised this month by the financial sector, with the large issue of NIS 2.4 billion carried out by Bank Mizrahi Tefahot through two new series of AAA-rated bonds by Maalot and Aaa by “Midroog”: NIS bonds with a 4.7-year maturity and an interest rate of 2.74%, and index-linked bonds with a 5.0-year maturity at a 0.1% interest rate and at a price of NIS 1,026 for NIS 1 par value of a bond.
Other large issues in this sector this month are: NIS 600 million was raised by the Migdal Capital insurance company through a new series of shekel bonds, a 5.5-year MHM, 3.26% interest, with an Aa3 rating by Midroog; NIS 499 million was raised by the financial services company Gamma Management in the issuance of two new series of shekel Aa3-rated bonds by Midroog: NIS-denominated bonds at a fixed interest rate of 3% and a 2.9-year maturity, and bonds at an interest rate of 2.9 years. Variable at a spread of 1.35% above the Bank of Israel interest rate and a 3-year interest rate.
About NIS 2.3 billion was raised this month by the real estate sector, about half of the amount raised by three real estate companies. The largest issues in this industry are: About NIS 507 million was raised by the Harit Magorit fund through a new series of bonds CPI-linked, 4.9-year maturity, at an interest rate of 0.3% and at a price of NIS 0.996 per NIS 1 par value of bonds, rated A- by Maalot; NIS 495 million was made by the construction company Shikun VeBinui with the expansion of two series of A-rated bonds by Maalot and A2 by Midroog: CPI-linked bonds with a 5.8-year MHM and a yield to maturity of 1.4%, and Shekel bonds with a MHM 5.5 years and yield to maturity 4.4%.
The derivatives market was characterized by low or similar trading volumes compared to the first quarter of the year.
The daily trading volume of options on the Tel Aviv-35 Index (monthly and weekly) decreased and amounted to approximately 82,000 units in April, compared with an average of 125,000 units in the first quarter of 2022. The VTA35 volatility index remained unchanged this month, at a level of approximately 19 points at the end. April is similar to the level it was at the end of March, compared to about 15 points at the beginning of the year. It should be noted that the US volatility index – the VIX rose to about 32 points at the end of April compared to about 20 points at the end of March.
The daily trading volume in dollar options amounted to approximately 41,000 units in April, similar to the average turnover in the first quarter of 2022. It should be noted that the turnover in April was approximately 28% higher than the turnover in the previous month and was affected by exchange rate volatility. The dollar strengthened by about 3.7% in April and reached a rate of NIS 3.29 towards the end of the month, when the growing expectations for raising the Fed interest rate by a sharper rate in May contributed to this.
At the end of April, 539 mutual funds with a value of NIS 101.3 billion are traded on the stock exchange.
This month, 2 new mutual funds worth about NIS 70 million were listed for trading: a mutual fund on the Fintech stock index abroad, Bluestar Fintech, which was listed for trading by Migdal. A mutual fund on the Tel Aviv-Bond Shekel 5-15 Bonds Index, registered by Kesem. Four mutual funds worth NIS 58 million became open funds, and one mutual fund worth less than NIS 1 million was liquidated and deleted from trading.
In addition, 36 foreign funds are traded in Tel Aviv, which are also traded abroad at the same time – the value of public holdings in these funds reaches NIS 2.2 billion at the end of April, similar to the value at the end of the previous month.
The market value of mutual funds at the end of April 2022 was about NIS 2 billion lower than the value at the end of the previous month: about NIS 1.9 billion Decrease in the value of mutual funds on international stock indices – a decrease of NIS 2.2 billion in value due to declining stock prices. An increase of NIS 0.3 billion from net public purchases.
NIS 0.3 billion increase in the value of mutual funds on stock indices in Tel Aviv. Approximately NIS 0.2 billion is due to an increase in net public purchases, mainly of mutual funds on the TA-125 and TA-90 indices, and approximately NIS 0.1 billion is an increase due to the rise in the stock indices.
NIS 0.4 billion Decrease in the value of mutual funds on bond indices, mainly corporate bonds in Tel Aviv – about half of public sales and half of declining bond prices. NIS 0.5 billion net to funds investing in Tel Aviv shares, following the NIS 1.8 billion that flowed into these funds in the first quarter of 2022. While in funds investing in Tel Aviv bonds, the public redeemed funds in the amount of NIS 0.6 billion, following redemptions in the amount of NIS 0.6 billion. NIS 2.3 billion net at the end of the first quarter of 2022. The foreign public net about NIS 0.1 billion net to the mutual funds – about half of the redemptions in these funds in the first quarter of 2022, due to expectations of a further increase in interest rates.