Aug.09, 2012 | 5:28 AM–Trading on the Tel Aviv Stock Exchange was mixed yesterday after modest declines for most of the day against the backdrop of concerns over planned government spending cuts.

The Tel Aviv-25 index ended the day 0.1% higher at 1,110 points, while the broader Tel Aviv-100 index slumped by 0.1% to 999 points. The Banks-5 index gained 1.6% for the day while the Real Estate-15 closed the day 0.1% higher.

The Insurance Index, representing a segment that led declines early in the day, slumped by 0.8%, while the Tel Bond indices traded substantially unchanged. Trading volume was an extremely light NIS 675.2 million.

The treasury’s announcement that it is proceeding without hesitation on preparing the 2013 state budget means the cabinet will soon be facing tough decisions on how to pass required cuts of NIS 12 billion to NIS 14 billion, despite the spending obligations the government has assumed as well as declining tax receipts. Trading in government bonds was mixed, following declines on Tuesday of up to 1.2%.

External events send bonds falling
“The fall in bond prices and the increase in yields is the result of external rather than local factors,” according to Clal Finance macroeconomist Amir Kahanovich. In a daily survey for investors, he attributed the decline in Israeli government bonds to events beyond Israel’s borders and said the higher yields on the bonds were in keeping with higher yields abroad due to lower demand for savings and increased demand for loans. This, he said, was apparently the result of increased economic optimism. “This explanation is also in keeping with the recent gains in the share market,” Kahanovich added…Read More>>

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