TASE to launch blue-chip, gas, communication indices

New index would include the 50 leading shares of Israel’s hi-tech industry and eventually replace the Tel Tech-15 Index, TASE CEO says.

December 27, 2010 23:50
3 minute read.
TASE CEO Ester Levanon speaks at a conference.

ester levanon_311. (photo credit: Moshe Shai)

The Tel Aviv Stock Exchange plans to launch new indices next year and encourage analyst coverage of local companies to attract foreign investment, TASE CEO Ester Levanon said Monday at a press conference in Tel Aviv.

“When we started to try and advance the Tel Aviv Stock Exchange as an international center for trade and investment in hi-tech companies, by which I also consider biotech companies, we realized that we needed to kickstart a process to increase the exposure of the market to companies of the sector and initially Israeli ones,” she said.

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“Next year we are coming out with new indices on the market,” Levanon said. “The last one launched this year was a biomed index. Next year we are going to introduce a new tech index and are considering other areas as well for equity indices such as gas, oil, communications and insurance.”

She said the new index would include the 50 leading shares of Israel’s hi-tech industry and eventually replace the Tel Tech-15 Index.

Out of 600 companies listed on the TASE this year, 144 are tech companies and 51 are biomedical companies, forming the basis for the exchange to become a hub for tech companies. Out of the 18 new companies joining the exchange this year, 15 were biomed and three were hitech companies. Seven companies left the exchange this year.

“However, the main problem we encountered was that many of these companies were lacking exposure to analyst coverage and exposure to international investors,” Levanon said. “We are in advanced stages to bring an international company to Israel that will start analyst coverage next year, including quarterly research reports of technology and biomed companies that need and want exposure. They [won’t focus on] large Israeli companies such as Teva Pharmaceuticals Industries or Nice Systems that already enjoy broad international analyst coverage.”

As part of the project, the exchange will guarantee a minimum income to the international company that is chosen, and companies interested in analyst coverage will pay a “reasonable” price for taking the services, she said.

Analyst coverage will include four company reports a year in Hebrew and English for a period of two years and will be posted on the exchange’s website, Levanon said.

“This will solve the problem of international investors not knowing what Israeli companies are doing,” she said. “First we are targeting the coverage of tech companies, and if it proves successful, we will extend it to companies in other sectors.”

The TASE also plans to introduce options on government bonds in the second quarter of 2011, for which it believes there is a high demand, Levanon said.

The Tel Aviv-25 Index rose some 14.2 percent this year, after surging by 76% in 2009, and surpassed its level on the eve of the financial crash that began in September 2008.

The index was boosted by the large gains of oil-and gas-exploration companies, which contributed one-fourth to the increase. In dollar terms, the TA-25 rose 20.4% this year and outperformed leading indices of developed foreign markets such as the Nasdaq 100 (20.2%) and the S&P 500 (12.9%).

“This year was a special year because it was a relatively normal year, following two years of excessive highs and lows on the exchange,” TASE chairman Saul Bronfeld said at the press conference. “Much of the normalization of the market can be attributed to the continued growth of the local economy in 2010, which was relatively good compared with most of the rest of the world.”

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