The Tel Aviv Stock Exchange is preparing to offer analyses of its biomedical stocks to lure listings from the U.S. and encourage institutional investors to buy shares lagging behind the bourse’s benchmark index.
The exchange is in talks with two companies and will pick one to roll out the program in early 2013, Chief Executive Officer Ester Levanon said. The bourse’s chief has met with four U.S. companies in the sector to persuade them to list their shares in Tel Aviv, she said.
“It’s very good for the market if we have analysts’ reports because no one really knows how to read reports for biomed companies,” Levanon said in an interview at Bloomberg’s headquarters in New York yesterday. “Institutional investors are worried they don’t understand enough. Once they have analyst reports they will be able to invest more in the companies.”
The CEO aims to spur investors’ interest in a sector that accounts for 42 percent of all high-tech companies in the country, according to Levanon. The Tel Aviv Biomed Index has gained 2 percent this year through yesterday, almost half the 4.2 percent advance by the benchmark TA-25 Index. The Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York increased for the first time in three days, led by Cellcom Israel Ltd.
The share of the government’s research and development budget allocated to health-related companies almost doubled in the last decade to 26 percent from 14 percent, according to the Ministry of Industry, Trade and Labor.
The bourse will serve as the intermediary between the company delivering analyst reports and the publicly traded biomedical company, and will be responsible for setting the price for the analysis, she said.
The move is one of the strategies being employed by the CEO to help revive trading volumes on the stock exchange, according to Gilad Alper, an analyst at Excellence Nessuah Investment House Ltd.
Trading on the TA-25 Index has slumped to 18.1 billion shekels ($4.6 billion) in the last year, compared with 30.3 billion shekels in the preceding 12 months, according to data compiled by Bloomberg.
“One of things she is trying to do is wake up the stock market,” Alper, a Ramat Gan, Israel-based analyst with Nessuah, said by phone yesterday. “One has to wonder how neutral, how objective, and how serious can the research be if it is designed to increase interest.”
Levanon said measures will be put in place to ensure no conflict of interest exists and companies are locked in a two-year contract to pay for the reports, regardless of the tone of the research.
‘Attract European Investors’
The TASE, as the Israeli exchange is known, is seeking to list derivatives of Israeli stocks on a European bourse early next year, Levanon said, without giving more details.
“The idea is to have an instrument popular in Israel to be traded in another exchange in Europe,” she said. “That will attract European investors to Israeli products.”
Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq stock market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.
The Bloomberg Israel-US 25 Index increased 0.7 percent yesterday to 85.03, with Cellcom rising 6 percent to $7.92. The mobile operator’s shares in Tel Aviv climbed 4.3 percent today to 31.53 shekels, or $7.99. The TA-25 Index advanced 0.3 percent.
Mellanox Technologies Ltd., an Israeli maker of technology used to transfer and store data, stemmed a two-day, 15 percent loss, with its shares in New York advancing 0.7 percent yesterday to $102.41. The Tel Aviv shares gained 0.4 percent to 409.3 shekels, or $103.78.
The Yokneam Elit, Israel-based company slumped last week after Stifel Nicolaus & Co. cut its recommendation on Aug. 7 to hold from buy, while Intel Corp., a bellwether for the semiconductor industry, reduced its sales forecast. Mellanox said Sept. 10 that Chief Financial Officer Michael Gray will retire in November and be replaced by Jacob Shulman.