Blue Square Gain Helps Index Beat U.S., Europe: Israel Overnight

Alon Holdings Blue Square Israel Ltd. and Elbit Systems Ltd. (ESLT) gained in the U.S. on prospects for increased revenue, helping Israeli companies traded in New York to outperform stocks in Europe and the U.S. Israel’s TA-25 index declined today.

Blue Square, Israel’s second-largest supermarket chain, rose to the highest level in two weeks yesterday after workers at its biggest competitor demanded talks on job security. Elbit Systems Ltd. (ESLT), the country’s biggest non-government defense company, rose yesterday after winning a $15 million contract to supply an Asian government agency with technology systems. The TA-25, the country’s benchmark, fell 0.5 percent at the 2:45 p.m. close in Tel Aviv today.

The Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York slipped 0.1 percent yesterday to 85.42, outperforming the S&P 500 Index (SPX)’s 1.9 percent plunge and the Stoxx Europe 600 Index’s 1 percent retreat. Israeli companies in the U.S. are trading at 8.2 times estimated earnings, below the 8.4 multiple on the TA-25 index and the S&P’s 9.8 level, according to data compiled by Bloomberg.

“This is a market with low risks and very comfortable valuation levels,” Eyal Dabby, the head of equity research at Bank Leumi Le-Israel Ltd., said about Israeli stocks in an interview yesterday with Maryam Nemazee on Bloomberg Television’s “The Pulse” program in London.

The TA-25 Index surged the most since 2009 on Oct. 16 after Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of a plan to avoid a Greek default, bolster banks and curb contagion.

Blue Square

Shares of Rosh Ha’Ayin, Israel-based Blue Square rose 2 percent to 21.42 shekels, or the equivalent of $5.86 in Tel Aviv today, the highest level since Sept. 21. The U.S. stock jumped 6.1 percent to $5.74 yesterday.

The country’s Histadrut labor federation called for immediate negotiations on job security measures for employees at Shufersal Ltd. (SAE), Israel’s largest supermarket chain, following an agreement to sell control of the retail chain.

Discount Investment Corp. has agreed to sell its 46 percent stake in Shufersal for 2.42 billion shekels ($662 million) to Isralom Properties Ltd. and England’s Noe family.

Shufersal’s profit would likely be hurt by a management shake-up, said Guil Bashan, an analyst at I.B.I.-Israel Brokerage & Investments Ltd. in Tel Aviv.

“If Shufersal is facing problems with its workers, then the first one to benefit from it would be Blue Square,” said Gilad Alper, an analyst at Excellence Investments House in Ramat Gan, Israel.

Elbit, Teva

Elbit declined 1.7 percent to 158.30 shekels, or the equivalent of $43.36. The U.S. shares increased 0.3 percent to $43.72 yesterday.

The company’s Wise Intelligence Technology system will be provided to the Asian government within 18 months, Elbit said yesterday in a statement, without providing further details on the purchaser.

Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest maker of generic drugs, slipped 0.1 percent to 143.90 shekels, or the equivalent of $39.41. The U.S. shares gained 0.3 percent to $39.29 yesterday.

After trading closed in the U.S. yesterday, an advisory panel to the U.S. Food and Drug Administration voted 17-0 that there wasn’t “compelling evidence” that 1-2 milligram doses of the drugmaker’s Azilect treatment slowed progression of Parkinson’s disease.

The shekel dropped 0.5 percent to 3.6552 per U.S. dollar at 4:48 p.m. in Tel Aviv. Israeli technology companies raised $569 million in capital during the second quarter, the most in two years, up from $343 million in the same period last year, according to the Israel Venture Capital-KPMG Quarterly Survey released July 13.

Partner Communications

Israel, whose population of 7.7 million is similar to Switzerland’s, has about 60 companies traded on the Nasdaq stock market, the most of any country outside the U.S. after China. It is also home to the largest number of startup companies per capita in the world.

The nation’s stock market was upgraded to developed market status by MSCI Inc. in May 2010, the same month the 63-year-old country was accepted to the Organization for Economic Cooperation.

Partner Communications Ltd., the second-largest mobile- phone operator, lost 0.5 percent to 41.77 shekels, or $11.46. The U.S. shares climbed 0.4 percent to $11.29, the highest level in two months yesterday.

The company’s controlling shareholder is in talks to sell 15 percent of its 45.5 percent stake in the company, newspaper Globes reported on Oct. 16 after the market closed.

Scailex Corp., which has a controlling stake in Partner, denied the report in a statement issued to the Tel Aviv Stock Exchange yesterday.

Tower Semiconductor Ltd. (TSEM), the maker of customized chips, rose 2.6 percent to 2.514 shekels, or 69 cents, in Tel Aviv. The U.S. shares dropped for the first time in four days, retreating 2.2 percent to 67 cents yesterday.

Tower required all its employees worldwide to take 10 days of unpaid vacation as the global economic slowdown reduced demand for its products, Globes reported yesterday, citing a letter sent to the workers by the company.

An e-mailed message to Hanna Yonai, a Tower spokeswoman, wasn’t returned.

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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