The first six months of 2022 were characterized by strong price declines in the financial markets, which did not miss the Tel Aviv Stock Exchange, where there were sharp declines in traded shares and bonds, along with a significant increase in trading volumes. A half summary of the stock market further shows that the wave of issues of the last two years has almost completely died out, and that local investors have abandoned the dreams marketed of losing technology companies, which constituted a decisive majority in the wave of issues.
However, the performance indices of the Tel Aviv Growth Indices are significantly better than those of the leading stock exchanges overseas. Tel Aviv-35 Ended the first half of the year with a relatively moderate decline of about 6% (after yielding a positive return of 32% in the past year) compared to a double-digit decline in the US and European indices.
The most severe collapse was experienced by the technology sector, which was affected by the sharp change in the tastes of Wall Street investors. Thus, an index NASDAQ Fell 26% in the first half of the year, while its Tel Aviv counterpart, Index Tel Aviv-Elite , Cut by 20%. The second-tier stock index on the stock exchange, SME60 Has experienced a sharp decline of about 18% since the beginning of the year, after an exciting return of about 30% in the past year.
The only one who excels among the stock indices in Tel Aviv is the one that enjoys rising commodity prices, and oil in particular, against the background of developing inflation, and later the outbreak of the war in Ukraine. The reference is to the index Tel Aviv Oil and Gas Which has jumped 36.6% since the beginning of the year. The index includes the shares and participation units of the major entities in the fields of energy on the stock exchange, headed by the Delek Group, which is controlled by Yitzhak Tshuva.
fuel It ran into severe liquidity difficulties with the outbreak of the corona crisis about two years ago, which threatened its business stability (including a “live business” note attached to its financial statements), but has made an impressive comeback in recent months, following the rise in oil and gas prices. Its current market value is NIS 8.6 billion – after rising by hundreds of percent from the low.
In fact, the Tel Aviv Oil and Gas Index continued its positive performance from last year, which it concluded with a 62% increase. Among the indices that surpassed it last year was the index. Tel Aviv Banks -5 , Which rose 68% in 2021, while this year, due to fears of an economic slowdown, recorded a median decline of 5%. Another hit of the past year, Index Tel Aviv Real Estate Has fallen by about 15% since the beginning of the year, having yielded about 53% in 2021 as a whole.
The stock exchange’s activity enjoys the turbulent trading days
The declines in the indices and the increasing volatility had a positive effect on the activity of the stock exchange itself. It enjoys turbulent trading days, which for it means paying higher fees than buying and selling securities frequently. Since the beginning of 2022, the average daily turnover in shares and converters in Tel Aviv has been NIS 2.5 billion, an increase of 31.5% compared to the average daily turnover in 2021 (NIS 1.9 billion). From NIS 3 billion to NIS 2.5 billion.
Daily trading in fixed income and fixed-term investment instruments of up to a year jumped twice from NIS 320 million on average per day in 2021, to NIS 640 million on a daily average in the first half of this year. The reason is the rapid rise in interest rates, The investment tool that has become a solid and “boring” solution in recent years.
Positive news comes when it comes to the level of fear in the markets – the local fear index (VTA35 ) – which rose from about 15 points at the end of the previous year to about 31 points in mid-March this year, but dropped again to a similar level of about 17 points towards the end of the first half.
Disturbing declines in government bonds
The summary presented by the stock exchange paints a disturbing picture of sharp declines in what should be a solid investment channel and refuge for risk-averse investors – Bonds of the State of Israel. Since the beginning of the current year, the Governor of the Bank of Israel, Prof. Amir Yaron, has raised interest rates for the first time since November 2018. The Governor made two increases, in April and May, and climbed from 0.25% to 0.75% today, in order to curb the inflationary outbreak.
Amir Yaron, Governor of the Bank of Israel / Photo: Eyal Yitzhar
Governor Yaron’s moves come against the backdrop of similar and determined moves made by US Governor Powell, which led to falls in government bond prices (and a rise in yields). 7.5%, led by NIS-denominated government bonds at a fixed interest rate for more than 10 years, which fell by about 16.5% during the same period. Such a sharp decline was due to the change in the level of interest rates and the future route, which entails expectations of further interest rate hikes.
Among the stock exchange indices, the index-linked government bonds index fell by 8.2% since the beginning of the year, after rising by 7.4% in the year 2021. The shekel government bond index, at the fixed interest rate, also dipped by 8%, after falling by 1% last year.
The two bond indices that recorded a more moderate decline were corporate bond indices. CPI-linked bonds fell by 5.6% since the beginning of the year, after rising by 8.7% last year, and the shekel Tel-Bond index fell by 5.2%, after rising by 3% last year.
From 100 issues in 2021 to 9 in the half of 2022
Only nine issues of new companies (IPO) Were carried out on the Tel Aviv Stock Exchange since the beginning of the year, and were recruited An aggregate amount of NIS 1.4 billion. This is compared to almost 100 new companies that raised a cumulative sum of NIS 10.5 billion in 2021 as a whole.
Among the issuing companies, the most prominent in terms of market value at the time of the issue was the construction company Group Acro , Which focuses on the construction of prestigious housing projects in Tel Aviv. The company, in which the main shareholder is Tzachi Arbov, raised half a billion shekels at a value of 4 billion shekels at the time of the IPO (since then the share has fallen by about 20%).
After her she stood out a house in the village , The sheltered housing network controlled by the Blushtein family and managed by Micha Perens, which raised a quarter of a billion shekels at a value of 1.3 billion shekels (and has since fallen by 16%). Satellite Photography Company ImageJest Which is held by IAI and the Pimi Fund of Yishai Davidi, was issued at a value of NIS 1.2 billion and has since lost 15%.
Prominent in their absence from the issue market are the small technology companies that characterized last year’s huge wave of issues. Among those who have managed to screw up and join the Club of Public Companies are Yuzrawi , A software company that has developed accessibility technology based on artificial intelligence. It raised NIS 32 million at a value of NIS 123 million and has since plunged 38%.