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Israeli stocks closed solidly lower in light Sunday trading, with only one gainer in the benchmark index, a day before the Bank of Israel makes its interest-rate call for January.
Analysts generally expect a quarter-point cut in the country's benchmark rate, to 4.75 percent, but some say that won't be enough to sap the shekel's strength against the dollar.
The Tel Aviv drop also comes on the heels of declines on Wall Street where the Dow Jones Industrial Average fell a total of nearly 1% on Thursday and Friday.
The Tel Aviv Stock Exchange's benchmark TA-25 Index fell 1.68% to 931.15 on Sunday while the TA-100 lost 1.63% to 931.19. The TA-25 peaked at 948.83 on Wednesday, while the TA-100 reached its high, 948.77, last Monday.
The Tel-Tech index of top technology issues, which saw two gainers and 13 losers, slumped 1.97% to 365.09. It topped out at 482.78 on Jan. 20, 2004.
The tech benchmark was particularly slammed on Sunday as Camtek lost nearly a quarter of its value, following a similar drop on Wall Street on Thursday and Friday.
The most-active issue was TA-100-listed Clal Industries, down 3.3% to NIS 22.68. Volume was $217 million, less than two-thirds of the TASE's 2006 average daily volume through November of $347m.
Analysts at Union Bank said they expected a cut of a 25 basis points, bringing the Israeli benchmark rate half a point lower than the US Federal Reserve's federal-funds rate, "in hopes of supporting the dollar. Despite this, we believe that a 0.25 percentage-point cut won't create enough pressure on the dollar, and a sharper rate cut is needed."
At Leader & Co., analysts said "there's no doubt that the Bank of Israel will lower the interest rate [Monday]. More important is the wording in the announcement regarding the possibility of continuing rate cuts (a message that was missing last month)."
The local currency's strength against the buck hurts exporters, whose products become more expensive. The shekel was fixed by the Bank of Israel on Friday at 4.186 to the greenback. It finished 2006 at 4.603. That's a more than 9% strengthening.
Among the 25 blue chips, only one, drugmaker Perrigo, managed to rise, by 0.5% to NIS 72.62. Teva Pharmaceutical dropped 1.1% to NIS 131.1 and Israel Chemicals shed 0.9% to NIS 26.72.
The TA-25 banks sank: Mizrahi-Tefahot by 3.4% to NIS 31.94, Discount by 2.7% to NIS 8.97, Hapoalim by 2.4% to NIS 20.48, and Leumi by 1.8% to NIS 17.23.
Two more banks within the Tel Aviv Finance 15 Index didn't help matters: First International Series 5 fell 2.1% to NIS 55.47 and Union Bank gave up 1.4% to NIS 20.33. The index itself dropped 1.99% to 1,204.04.
The holding companies as a group dropped: IDB Holdings down 2.6% to NIS 110.7, IDB Development down 2.8% to NIS 133.6, Delek Group down 2.3% to NIS 742.9, Discount Investments down 1.9% at NIS 122 and Israel Corp. down 2.3% to NIS 2,198.
Delek is parent to fuel refiner and retailer Delek US Holdings while Israel Corp.
is a major shareholder in Tower Semiconductor. TA-100-listed Tower fell 2.2% to NIS 7.75.
TA-25-listed Ormat Industries fell 1.3% to NIS 46.5. Clal Finance Batucha analyst Yuval Ben Ze'ev raised his target price to NIS 50 from NIS 48 while reiterating a "market-perform" rating on the parent of power-plant producer Ormat Technologies.
Camtek Ltd., a maker of optical inspection systems, finished at NIS 18.19. It said on Thursday that it expected fourth-quarter revenue of $19m. to $20m., due to lower-than-expected sales in its semiconductor segment.
When the company reported third-quarter earnings in early November, CEO Rafi Amit had said that "based on our current view of our markets, we expect revenues in the next quarter to come within 5% of the third-quarter revenue level" of $26.3m.
Camtek said in its latest statement that "a few of our customers delayed their purchasing decisions, while a few others requested to defer delivery of their orders to subsequent quarters. We believe this lower revenue level in our semiconductor business is not indicative of the upcoming quarters." But to maintain profitability in coming quarters, the company is keeping a close eye on expenses and freezing hiring.
Elbit Systems, the defense contractor, was the most-active Tel-Tech issue, down 1.7% at NIS 136.2.
The two tech-benchmark gainers: computer-security-solutions provider Aladdin Knowledge Systems, up 0.8% at NIS 74, and lens maker Shamir Optical, up less than 1% at NIS 36.62.
The Tel Aviv Real Estate Index fell 2.07% to 666.29 as all 15 members declined.
The active percentage leaders: Africa Israel Investments, down 2% at NIS 299.1, Elbit Medical Imaging - which also has medical-scanning interests - down 2.2% at NIS 139.5 and Gazit-Globe down 0.9% at NIS 56.81.
Ituran, which provides vehicle-location and other services, fell 0.9% to NIS 61.82. Clal Finance Batucha analyst Tzachi Avraham raised the company to "outperform" from "market perform" with a $17.30 target price on the US shares.
Adgar Investment, a member of the smaller-cap Yeter 30 index, fell 1% to NIS 6.2. The company agreed to lay out C$15.5m. to buy a Toronto office building.
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