Israeli Stocks Increase amidst Cease-Fire Talks

Israeli bonds and stocks have seen a high for the first time in last 3 days. TA-25 index has increased by 0.6% and is at 1188.71 now. This is probably the result of international measurements to cease-fire between Palestine and Israel. The yield on the 5.5 percent Mimshal Shiklit bonds however saw a decrease of 3.99% by dropping 2 basis points. Incidentally, last week, Palestine missiles landed in surrounding areas of Jerusalem and Tel Aviv. As a reaction measurement, Israel also started bombardment on the Gaza strip. The military operation was named as Pillar of Defense. The fighting has reached its fifth day now and more than 50 Palestinians have already been killed. 3 Israelis have also lost their lives due to the rocket attacks launched by Palestine. This conflict has already created high tension in the region which saw several uprisings and also a civil war in Syria last year.

Recep Tayyip Erdogen, the Prime Minister of Turkey and Mohamed Mursi, the President of Egypt met yesterday to discuss the bombardment between Israel and Palestine. According to Erdogen, Palestine is ready to stop missile attacks if US guarantees that Israel will stop the fight. Mursi, on the other hand, decided to withdrew Egypt’s ambassador in Israel, thereby, objecting the fire strikes in Gaza. Richard Gussow who works as the Senior Analyst said that as investors are seeing signals of cease-fire, they have started to return to the market.

Nice Systems Ltd., which is more popular by the name NICE has seen an increase in its share prices by 1.9%. The current price is at 128.8 shekels. Incidentally, NICE is one of the leading Analytical Telecommunication Product Developers of Israel. The largest fixed-line provider of Israel, Bezeq Israeli Telecommunication Corp. also saw advancement of 1.9% in share prices; the current price is at 4.587 shekels.

As far as the value of shekel is concerned, it rose by 0.3% and is priced at 3.9964 a USD now. Last week, the currency saw a decline of 1.3% after the missile attacks started.

The two-year break-even rate of Israel saw a slump of 29 basis points and is currently at 205. The slump was mainly because of the country’s annual inflation in October slowed more than the initial forecast. Incidentally, break-even rate is the yield difference between fixed-rate Government bonds and inflation-linked bonds.

According to Avihay Hermon, who works as a bond trader at Psagot Investment House Ltd., the market is currently adjusting the downward expectations of inflation. This has been resulted by the lowering down of consumer prices by more than expectation.

The yield on the 1% bonds due May 2017 has risen by 12 basis points and now is at 0.441%. This marks the biggest gain of this yield since 19th September. The housing rental and gasoline prices have gone down resulting slowing down of inflation to 1.8% in October. In September, the same was however 2.1%. The median estimate of the country is at 2.2% now.

When it comes to Egypt, EGX 30 index of the country also tumbled by 2.8% and is now at 5505.92. According to HC Brokerage’s Equities Trader, Hassan Kenawi, this is pretty natural due to negative sentiments for Gaza attacks and the recent train accident in Egypt that took lives of 49 children. The trouble does not end here for Egypt as the certain members of the committee which is writing the constitution of Egypt are already threatening to quit the same. This is because of their dispute with other Islamic members of the committee who are more in numbers there. Kenawi also mentioned that a reversal in Egypt economy is probably not expected until some positive news pops up.

Among other Middle-East countries, DFM General Index of Dubai and Abhu Dhabi’s measure plummeted by 1% and 0.4% respectively. On the other hand, Tadawul All Share Index of Saudi Arabia and QE Index of Qatar saw increases of 0.4% and 0.8% respectively.