| Yaniv Pagot, Senior Vice President of the Tel Aviv Stock Exchange |
In collaboration with Yaniv Hirsch, Director of the Index Marketing Division
The huge wave of issues that has plagued the Tel Aviv Stock Exchange since 2019 has expanded the range of areas of activity that can be exposed through investment in the Tel Aviv Stock Exchange and today almost every fourth company on the Tel Aviv Stock Exchange is a new company.
While the media attention is naturally given to the expansion of the line of technology companies on the Tel Aviv Stock Exchange, few have noticed that the field of stock network marketing has received a copious dose of new blood from significant companies known in every home in Israel.
Today, seven of the nineteen companies included in the index are new public companies that were listed for trading on the local stock exchange as of 2019.
The field of fashion chains that included on the eve of the current wave of issues the companies Fox (TASE :), Castro (TASE :), Golf (TASE :), Brill (TASE 🙂 and Adika (TASE 🙂 has expanded significantly with the addition of prominent fashion companies such as Terminal X ( TASE :), Retailers (TASE 🙂 and Delta Brands (TASE :).
The field of retail chains, which has always had a significant stock market presence, received additional power in the form of the Yohannoff Company (TASE 🙂 and the Quick Company (TASE :).
The field of home equipment chains, which had no stock exchange presence at all on the eve of the current wave of issues, gained representation with the issuance of the companies Max Stock (TASE 🙂 and Multi-Retail (TASE 🙂 (formerly ACE).
The aggregate market value of the companies included in the Tel Aviv-Marketing Networks Index is about NIS 42 billion, with a third of this value being the aggregate value of the new retail chains.
This figure shows that the increase in the supply of retail chains in the last three years is not only quantitative but also qualitative growth, since these are significant new companies in their field. It should be noted that already today the wide range of marketing chains on the Tel Aviv Stock Exchange creates an investment opportunity for investors who believe in the business opportunity that produces growth in private consumption in Israel.
Israeli retail chains are performing well compared to the years before the Corona crisis due to the supportive macro environment. According to data from the Bank of Israel, in the first half of 2021 it rose by 5.3% on an annual basis, a significant figure, especially while we are in the midst of a global epidemic.
Economic growth stemming from accelerated growth of private consumption, supported by a rare annual growth of 2% per year in the size of the population in Israel that ensures growth and future demand for the local economy.
The comfortable macro environment alongside the eroded consumer awareness over the past decade have allowed some of the retail chains to raise prices and thereby improve operating profit rates while enjoying the top-notch growth that stems from growing demand.
The strong Israeli economy produces a reality in which our local currency is one of the strongest currencies in the world in recent years, despite the relatively sharp devaluation since the beginning of 2022. For most retail chains, which import some of the products, the strong shekel is a significant advantage. At relatively cheap costs.
The corona plague that has entered our lives in the last two years and is still not seen to end, gave rise to the “closed sky phenomenon”, ie fewer Israelis travel abroad. This phenomenon has led to a significant increase in the amount of Israeli consumer money left in Israel.
The public increased its purchasing power during the epidemic and the amount of money invested in online shopping grew significantly. Recently, a report was published on the distribution of Israelis’ purchases of credit cards and it was found that for every 3 shekels that the Israeli spends, one shekel goes to companies in the fields of food, beverages, clothing, footwear, electricity, etc. Increase their online sales capabilities.
There is no doubt that Israel is one of the most expensive countries in the Western world and recently it was even announced that Tel Aviv is considered the most expensive city in the world. There are many and varied reasons for the high cost of living in Israel, from the large monopolies operating in the economy, barriers to entry for new players, onerous regulation, relatively high taxation, the cost of expensive labor, traffic jams in ports and more.
It seems that after a political paralysis that included four election campaigns, there is now a government in Israel that wanted to address the aforementioned challenges by reducing tariffs, but other steps are essential in order to change the reality in the field of prices.
We are in the midst of days when the cost of living in Israel is regaining public attention. Investors who believe that Israeli retail chains raise product prices more sharply than the increase in inputs can translate this appreciation into investment through exposure to the Tel Aviv-Marketing Networks index.
Exposure to the field of retail chains in Israel enables investors to translate the intensity of private consumption into personal profits. We all hope that the crisis of trust between Israeli consumers and some of the chains will end soon, in a way that consumers will enjoy a fair price environment and the marketing chains will continue to do what they know best in the world and that is to strike the Israeli consumer’s tastes.
The author is a senior vice president of the stock exchange, director of the trading department, derivatives and indices. , Guidance, advice, opinion or recommendation to act in one way or another, including in everything related to making decisions in the field of investments or because of the presentation or commitment of the stock exchange and / or members of the stock exchange group and is not a substitute for personal advice based on each person’s needs and data.