Delek London Listing Plan Is Warning Sign at UBS: Israel Markets
2014-01-06 07:01:24.256 GMT
(For more top news about Israel, click {TOP IS <GO>}.)
By Shoshanna Solomon
Jan. 6 (Bloomberg) -- Delek Group Ltd.’s plan to list
shares abroad should serve as a warning to the Israeli
government that tax and regulatory changes are sapping trading
on the national stock exchange, according to UBS AG.
The company with stakes in the country’s largest natural
gas fields became on Dec. 31 the third member of the benchmark
index to announce such plans last year. The TA-25 Index gained
half as much as the MSCI World Index in 2013, while buying and
selling on the gauge tumbled 48 percent in the past two years.
The decisions to trade overseas underline the challenges
faced by the Tel Aviv Stock Exchange as a surge in the shekel
hurts exports and Israel’s economic growth slows. The trend
would leave the bourse “hollowed out of its most-attractive
stocks,” according to the brokerage unit of Excellence Nessuah
Investment House Ltd. in Ramat Gan, Israel.
“These companies are looking abroad because the local
market is not managing to attract foreign investors,” Ady
Vigodsky, the head of equities at UBS in Herzliya, Israel, said
in a phone interview on Jan. 6. “This will lead to a further
drop in volumes on the exchange. The government must find ways
to lure these investors back.”
A flurry of legislation aimed at boosting government
royalties and competition has fueled a decline in foreign
investment in the $155 billion stock market. Overseas investors
spent $300 million, or 18 percent, less in the first 11 months
of last year on Israeli shares than in the same period of 2009,
the year before the country’s re-classification to developed
market at index provider MSCI Inc.
Mellanox Delisting
Delek Group’s announcement meant that companies accounting
for more than 10 percent of the weighting on the benchmark
index, said they plan to trade abroad. Israel Chemicals Ltd., a
fertilizer maker that harvests minerals from the Dead Sea, said
in November it will dual list shares to reach global investors
while Israel Corp., the company of billionaire Idan Ofer, said
in June it plans a foreign listing. Mellanox Technologies Ltd.
delisted from Tel Aviv in September citing regulation.
“Regulation can be unpredictable and short-termist, and
without doubt several of our holdings would benefit from greater
visibility,” London-based William Scholes, an assistant
investment manager at Aberdeen Asset Management Plc, which
oversees $318 billion, said by e-mail Jan. 2. “Because the
Israeli market is small and somewhat isolated, the role of a
regulator in maintaining competition is very relevant in certain
instances.”
‘Big Stick’
Finance Minister Yair Lapid said at a conference in Tel
Aviv last month that his ministry plans to cut bureaucracy and
regulation as current levels are “pushing people and companies
away.” Avishay Braverman, chairman of the parliamentary
economic affairs committee, said Israel has a surfeit of
regulators that don’t communicate well with each other.
“Israel has too many regulators,” he said by phone Jan.
2. “I would prefer fewer regulators with a big stick.”
The TA-25 Index will increase in 2014, Ramat Gan, Israel-
based investment house Halman-Aldubi Group said, amid the lowest
interest rates in four years and after Fitch Ratings raised
Israel’s credit outlook in November, citing greater political
stability.
Halman-Aldubi, which manages the equivalent of about $4.3
billion in assets, forecast the benchmark index, which closed at
1,323.43 yesterday, may reach 1,500 this year, according to an
e-mailed note Dec. 11.
The measure gained 12 percent last year, compared with a
jump of 24 percent for the MSCI World Index. The shekel surged
7.5 percent in 2013, the best performer among 31 major
currencies tracked by Bloomberg, as the economy expanded an
estimated 3.5 percent, according to the median of 18 forecasts
on Bloomberg. Growth may slow to 3.4 percent this year, the data
show.
MSCI Upgrade
Emerging market investors exited the local bourse as the
nation joined MSCI’s developed market index, forcing Israeli
companies to compete with those from the U.S., Europe and Japan
for fund managers’ attention.
Bourse Chief Executive Officer Ester Levanon resigned in
July after a failed attempt to get Israel included in the MSCI
Europe index in an effort to boost volumes. Levanon was replaced
on Jan. 1 by Yossi Beinart, who headed IG Group Holdings Plc’s
Nadex binary options exchange in Chicago.
The Tel-Aviv Stock Exchange and the Israel Securities
Authority didn’t respond to e-mailed requests for comment.
‘Further Deterioration’
Israel Chemicals’s pursuit of a dual listing in New York
will increase its proximity to international investors and offer
“greater flexibility for financings, mergers and
acquisitions,” the company said in an e-mailed statement to
Bloomberg Jan. 5. It will also better protect the company
against “the possible further deterioration of Israel’s
business environment and stock market,” it said.
Stefan Borgas, chief executive officer of the company, said
at a conference in Tel Aviv on Dec. 9 “frequent and unplanned
regulation” is “poison” for the company, making it difficult
to grow within its home market. The shares tumbled 35 percent
last year, the worst performer on the TA-25 Index, as regulatory
intervention dogged its plans and amid upheaval in the global
potash market.
Houston, Texas-based Noble Energy Inc., which is exploring
for gas offshore Israel with partner Delek Group, complained on
Nov. 21 about Israel’s “incredibly lengthy” policy making
process that has delayed by a year the development of Leviathan,
the country’s biggest gas field.
“Whimsical behavior of the government and lack of
commitment to its own decisions is creating an unprecedented
hostile business environment,” Gilad Alper, a senior analyst at
the brokerage unit of Excellence Nessuah, which manages the
equivalent of $19 billion, said by phone on Jan. 2. “All this
could be a nail in the coffin of the exchange.”
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Top Stories:TOP<GO>
--With assistance from Samuel Potter in Dubai and Robert Lakin
in Tel Aviv. Editors: Claudia Maedler, Andrea Snyder
To contact the reporter on this story:
Shoshanna Solomon in Tel Aviv at +972-3-542-7108 or
ssolomon22@bloomberg.net
To contact the editor responsible for this story:
Claudia Maedler at +971-4-364-1025 or
cmaedler@bloomberg.net
2014-01-06 07:01:24.256 GMT
(For more top news about Israel, click {TOP IS <GO>}.)
By Shoshanna Solomon
Jan. 6 (Bloomberg) -- Delek Group Ltd.’s plan to list
shares abroad should serve as a warning to the Israeli
government that tax and regulatory changes are sapping trading
on the national stock exchange, according to UBS AG.
The company with stakes in the country’s largest natural
gas fields became on Dec. 31 the third member of the benchmark
index to announce such plans last year. The TA-25 Index gained
half as much as the MSCI World Index in 2013, while buying and
selling on the gauge tumbled 48 percent in the past two years.
The decisions to trade overseas underline the challenges
faced by the Tel Aviv Stock Exchange as a surge in the shekel
hurts exports and Israel’s economic growth slows. The trend
would leave the bourse “hollowed out of its most-attractive
stocks,” according to the brokerage unit of Excellence Nessuah
Investment House Ltd. in Ramat Gan, Israel.
“These companies are looking abroad because the local
market is not managing to attract foreign investors,” Ady
Vigodsky, the head of equities at UBS in Herzliya, Israel, said
in a phone interview on Jan. 6. “This will lead to a further
drop in volumes on the exchange. The government must find ways
to lure these investors back.”
A flurry of legislation aimed at boosting government
royalties and competition has fueled a decline in foreign
investment in the $155 billion stock market. Overseas investors
spent $300 million, or 18 percent, less in the first 11 months
of last year on Israeli shares than in the same period of 2009,
the year before the country’s re-classification to developed
market at index provider MSCI Inc.
Mellanox Delisting
Delek Group’s announcement meant that companies accounting
for more than 10 percent of the weighting on the benchmark
index, said they plan to trade abroad. Israel Chemicals Ltd., a
fertilizer maker that harvests minerals from the Dead Sea, said
in November it will dual list shares to reach global investors
while Israel Corp., the company of billionaire Idan Ofer, said
in June it plans a foreign listing. Mellanox Technologies Ltd.
delisted from Tel Aviv in September citing regulation.
“Regulation can be unpredictable and short-termist, and
without doubt several of our holdings would benefit from greater
visibility,” London-based William Scholes, an assistant
investment manager at Aberdeen Asset Management Plc, which
oversees $318 billion, said by e-mail Jan. 2. “Because the
Israeli market is small and somewhat isolated, the role of a
regulator in maintaining competition is very relevant in certain
instances.”
‘Big Stick’
Finance Minister Yair Lapid said at a conference in Tel
Aviv last month that his ministry plans to cut bureaucracy and
regulation as current levels are “pushing people and companies
away.” Avishay Braverman, chairman of the parliamentary
economic affairs committee, said Israel has a surfeit of
regulators that don’t communicate well with each other.
“Israel has too many regulators,” he said by phone Jan.
2. “I would prefer fewer regulators with a big stick.”
The TA-25 Index will increase in 2014, Ramat Gan, Israel-
based investment house Halman-Aldubi Group said, amid the lowest
interest rates in four years and after Fitch Ratings raised
Israel’s credit outlook in November, citing greater political
stability.
Halman-Aldubi, which manages the equivalent of about $4.3
billion in assets, forecast the benchmark index, which closed at
1,323.43 yesterday, may reach 1,500 this year, according to an
e-mailed note Dec. 11.
The measure gained 12 percent last year, compared with a
jump of 24 percent for the MSCI World Index. The shekel surged
7.5 percent in 2013, the best performer among 31 major
currencies tracked by Bloomberg, as the economy expanded an
estimated 3.5 percent, according to the median of 18 forecasts
on Bloomberg. Growth may slow to 3.4 percent this year, the data
show.
MSCI Upgrade
Emerging market investors exited the local bourse as the
nation joined MSCI’s developed market index, forcing Israeli
companies to compete with those from the U.S., Europe and Japan
for fund managers’ attention.
Bourse Chief Executive Officer Ester Levanon resigned in
July after a failed attempt to get Israel included in the MSCI
Europe index in an effort to boost volumes. Levanon was replaced
on Jan. 1 by Yossi Beinart, who headed IG Group Holdings Plc’s
Nadex binary options exchange in Chicago.
The Tel-Aviv Stock Exchange and the Israel Securities
Authority didn’t respond to e-mailed requests for comment.
‘Further Deterioration’
Israel Chemicals’s pursuit of a dual listing in New York
will increase its proximity to international investors and offer
“greater flexibility for financings, mergers and
acquisitions,” the company said in an e-mailed statement to
Bloomberg Jan. 5. It will also better protect the company
against “the possible further deterioration of Israel’s
business environment and stock market,” it said.
Stefan Borgas, chief executive officer of the company, said
at a conference in Tel Aviv on Dec. 9 “frequent and unplanned
regulation” is “poison” for the company, making it difficult
to grow within its home market. The shares tumbled 35 percent
last year, the worst performer on the TA-25 Index, as regulatory
intervention dogged its plans and amid upheaval in the global
potash market.
Houston, Texas-based Noble Energy Inc., which is exploring
for gas offshore Israel with partner Delek Group, complained on
Nov. 21 about Israel’s “incredibly lengthy” policy making
process that has delayed by a year the development of Leviathan,
the country’s biggest gas field.
“Whimsical behavior of the government and lack of
commitment to its own decisions is creating an unprecedented
hostile business environment,” Gilad Alper, a senior analyst at
the brokerage unit of Excellence Nessuah, which manages the
equivalent of $19 billion, said by phone on Jan. 2. “All this
could be a nail in the coffin of the exchange.”
For Related News and Information:
Bourse’s New CEO to Battle Volumes to Delistings: Israel Markets
NSN MWMEXQ6TTDU0 <GO>
Tel Aviv Bourse Taps Outsider Beinart as CEO After Trading Sinks
FIFW NSN MVK29Q6VDKI1 <GO>
Israel Developed Market Turns Into Be Careful What Is Wished
FIFW NSN MR7WO06TTDS0 <GO>
Tel-Aviv Stock Exchange CEO Levanon Resigns Amid Volume Drop
FIFW NSN MQ39IW6JIJVJ <GO>
Top Stories:TOP<GO>
--With assistance from Samuel Potter in Dubai and Robert Lakin
in Tel Aviv. Editors: Claudia Maedler, Andrea Snyder
To contact the reporter on this story:
Shoshanna Solomon in Tel Aviv at +972-3-542-7108 or
ssolomon22@bloomberg.net
To contact the editor responsible for this story:
Claudia Maedler at +971-4-364-1025 or
cmaedler@bloomberg.net