Most investors would like to forget the past year. Apart from the oil and gas index, all stock indices in the local stock exchange were colored red this year
The last trading day for 2022 at the Hazut Beit Stock Exchange ended with a rise in prices, but in the summary of the year prices were recorded in most of the leading indices. The Tel Aviv 35 index concluded the year with a decrease of about 10%, the Tel Aviv 90 index fell by 18% this year, the banking index decreased by only 5.3%, and the real estate index concluded the year with a 30% decrease in the shadow of interest rate increases On the other hand, the Tel Aviv Oil and Gas Index concluded 2022 with a jump of 37%, and in fact was the only index, along with the Tel Bond with a variable interest rate, that recorded a positive return this year.
For comparison, the Nasdaq on Wall Street lost about 33% this year, the S&P 500 index fell about 20% (bearish territory), the financial sector (NYSE: XLF) in the US lost 11%, the technology sector (NYSE: XLK) plunged At about 28%, the health sector (NYSE: XLV) fell by 2% and pretty much ‘guarded’ the market. On the other hand, the energy sector jumped by about 63% (NYSE: XLE).
The increase in the rate of inflation in Israel above the target range set by the Bank of Israel law, resulted in the increase of the interest rate in the economy, similar to what is done in the world, to the level of 3.25%. The increase in interest rates puts pressure on the borrowers, but also increases the financing costs of the companies. The round of interest rate hikes may indeed reach exhaustion as the rate of inflation moderates, but for now interest rate hikes in Israel are expected to continue at least up to a level of 4% as economists estimate.
Accordingly, we have seen some of the real estate companies on the stock exchange come to the brink of spinning. For example, G City (formerly Gazit Globe), whose bonds trade at a yield to maturity of a double-digit rate, started a quick asset sale procedure in order to reduce leverage. The parent company Norstar, which relies on Mainly on dividends from G. Cite, it was also caught up in the increase in bond yields, and suffered a downgrade from the rating companies, similar to the subsidiary that is considering stopping dividends.
Together with Eitan, Shikun Vabinui’s stock, which was cut by 50% this year, stood out for the negative, when the trend of declines intensified in recent days in the shadow of Midrog’s report, according to which there was an increase in the company’s credit risk. The Hanan Mor share has also seen better days, when it completed a 35% fall in the last month and its bonds are trading at a yield of 11.7% – which reflects investors’ concerns that the project in Sde Dov that boosted the company up a notch could weigh on the debt burden.
On the other hand, the energy companies enjoyed a dream year. For example, Energy, which led the increases in the index, jumped 59.5% this year. Delek, which is controlled by Yitzhak Tshuva, decreased by about 4% on the last trading day, but concludes the year 2022 with a jump of 50%. It is followed by Alon Gas with a return of 47% this year, Racio with an increase of 42% and Shiramco with 38%.
banks
Among the bank stocks, International’s stock stood out positively with a 16% increase in 2022. On the other hand, Discount stood out negatively with a 9.85% decrease, Leumi decreased by a similar rate, Mizrahi Tefahot decreased by only 2.1%, and Po’aleim concluded the year without any substantial change.
Not the year of the mound bonds
It was not an easy year for corporate bonds when none of them included in Tel Bond 60 recorded a positive return. The negative trend was led by G. City (12th bond) which stood out with a 28% fall, followed by Mekorot with a 17.3% drop, Shikun and Binui lost 15.7% and Azrieli with a 13% drop in series 6 bonds.
The insurance plus index – the stock market stars
The stock of the Stock Exchange stood out with an increase of about 27% in 2027, after the Insurance Plus index is placed Michman with an increase of 11%, Manif increased this year by 6% and apart from that the other shares in the index recorded a negative return, including the value of Finance which collapsed by 81% , Megdol fell by 74%, Libra fell by 68%, Ayalon fell by 50%, Sheba lost 49% and Malren fell by 48% this year while the controlling owner Ryan Moand continues to make own purchases of the stock.
Where, after all, was a positive return recorded this year? The Tel Bonds attached to the index managed to catch up with the rate of inflation and present a positive return. For example, Ishers Bond III with a positive yield of 2.2% this year, Alrov Real Estate Bond D with a positive yield of 2.1%, Properties and Building Bond F with a similar positive yield. On the other hand, the linkage did not help G City’s 16 and Vid bonds, which concluded the past year with a decrease of 30% and 25% respectively.