Sep.28, 2012 | 6:38 AM–Last Rosh Hashanah was a festive one for the residents of Tel Aviv’s ritzy Rothschild Boulevard.
After three months of having a vast tent camp running the length of the street, the protesters had packed up and gone home. Finally the residents’ lives could go back to normal.
But looking back on how the capital markets fared over the past Jewish year of 5772, it seems the protest movement left a lasting imprint on asset prices, and not in a good way.
The awakening of the Israeli consumer triggered a chain reaction that reached affected every sector. Enormous sections of Israel’s economy had been based on exploiting consumer weakness; they were unprepared for consumers starting to stand their ground.
Supermarket chains, such as Dudi Wiessman’s Alon Blue Square and Nochi Dankner’s Super-Sol, lost as much as 60% of their market value over the course of Jewish year 5772. Food manufacturers such as Strauss and Osem lost up to 20%.
Not only that: regulators bit down. The communications minister turned the market he oversees on its head, forcing reforms that brought in new players, which in turn decimated the income, and share prices, of the big mobile operators: Ilan Ben-Dov’s Partner, Dankner’s Cellcom and Shaul Elovitch’s Bezeq, each of which lost up to half it market value.
And then there was the finance sector.
The threat of the economic concentration committee’s recommendations, coupled with the uncertainty in global markets, wiped 20% off the value of the index of insurance shares.
Then the losses struck the holding companies that own these battered businesses. All the publicly-traded holding companies lost value this year, but among the hardest hit was Dankner’s IDB group, two of whose companies – IDB Holdings and Discount Investments – lost 70% of their value over the last year.
The implosion wasn’t confined to share prices. Bonds issued by these groups tanked.
Thus, in 5772, while the Israeli economy continued to grow, the Tel Aviv Stock Exchange went in another direction entirely.
All in all, the public racked up losses worth billions during 5772. Our provident funds presented average returns of only 2.8%. Once you factor in inflation, that may even turn out to be a loss in real terms.
In comparison, the Dow Jones Industrial Average gained 20% in the past 12 months and Germany’s DAX index gained 36%…Read More>>