The value of the companies decreased – but the Tel Aviv Stock Exchange recorded record profits in 2022

The year 2022 was bad for most of the shareholders traded on the stock exchangewhile the stock and bond indices recorded negative returns. Thus, the cumulative value of all companies on the stock exchange decreased by 11% – from NIS 1.2 trillion to NIS 1.02 trillion. Particularly successful, in which it recorded record profits from its operations since it became public in 2017.

The stock exchange, led by CEO Itai Ben Ze’ev, posted a profit of 50.8 million shekels last year, an 11% improvement compared to 2021. In 2018, the stock exchange recorded a net profit of 86 million shekels, but 65.5 million of which resulted from the cancellation of the provision for depreciation of the previous stock exchange building (That is, the profit from operations that year amounted to 21 million NIS.) The net profit in the fourth quarter of the stock exchange amounted to 13.2 million NIS, a decrease of 7% compared to the corresponding quarter.

The largest shareholder in the stock market today is the Manikai Global Fund, which owns 20.1% of its shares. Since the exchange became a public company in 2017, its management is working to increase profitability. This causes quite a few factors in the industry to claim that the stock market’s moves to increase profitability are being made at the expense of the public.

This is what happened this year when the management of the stock exchange decided to raise the fees For the use of the indices it issues at rates ranging from 50% to 100%. The move drew strong opposition among the association of mutual funds, the main users of the indices, which explained that the cost of use would be passed on to the public. However, the stock exchange’s determination to raise prices led to the threat of a lawsuit by the regulator, the Securities Authority, which finally agreed to approve the stock exchange’s new price list.

The negative trend in the Israeli stock market throughout 2022 also caused the wave of issuances to stop. If in 2021 94 new companies joined the stock exchange, last year only 13 new companies joined. Today there are 548 companies that have issued their shares on the stock exchange. However, the continuous increase in the number of companies traded on the stock exchange, along with an increase in the daily trading turnover in shares and corporate bonds, at a rate of 22% and 15% respectively, resulted in an 11% increase in the stock exchange’s revenues to NIS 361 million in 2022.

In order to reduce costs and increase profitability, in 2022 the stock exchange ceased to be the main sponsor of the Premier League in soccer (the stock exchange was replaced by One Zero Bank). The footballers who were busy advertising the stock market in recent years were replaced by other celebrities who explained the various options for investing privately in the stock market. Despite the cancellation of the agreement with the Premier League, marketing and distribution costs in 2022 increased by almost NIS 2 million to NIS 13.2 million, mainly due to numerous advertising campaigns throughout the year.

The high profitability of the stock market is very beneficial with Ben Zeev. The cost of his salary for 2022 is NIS 5.3 million, since the latter is entitled to a grant of NIS 818,000 and a NIS 530,000 share-based payment alongside a fixed salary at a cost of almost NIS 4 million. The cost of Yaniv Pagut, Senior Vice President Director of the Derivatives and Indices Trading Department, who is responsible for various developments of trading on the stock exchange, reaches NIS 1.5 million per year.

The market value of the stock exchange in Tel Aviv today stands at NIS 1.75 billion, after its share rose by 11.8% in the past year, compared to the Tel Aviv Insurance and Financial Services index, in which the stock exchange is a member, which fell by 20.8%.