Israel’s benchmark stock index rose for a third day as Fitch Ratings raised the country’s credit outlook and after shares in the U.S. and Europe advanced.
The TA-25 Index climbed 1.4 percent to a record 1,377.79 at the close in Tel Aviv. Teva Pharmaceutical Industries Ltd. advanced the most in more than a week tracking gains in its U.S.-traded shares and Osem Investments Ltd. rose for a third day. Egypt’s benchmark EGX 30 Index ended a six-day losing streak after the constitution-writing committee voted in favor of more than half of the charter’s articles.
Fitch, which affirmed Israel’s A rating, raised the country’s outlook to positive from stable on Nov. 29, citing the shrinking deficit as the country cuts debt and boosts tax income. The shekel strengthened against the dollar every day last week, bringing the gain for the year to 6 percent. U.S. stocks rose for an eighth week as data on employment and consumer sentiment boosted confidence in economic growth and European stocks posted their biggest weekly gain since October.
The TA-25 gains follow “positive sentiment in the global markets and the rating outlook increase from Fitch,” Daniel Rapoport, head of equity and derivatives at Bank Leumi, said by phone.
Global markets, reduced geopolitical risk and low interest rates have helped push Israel’s index to new highs. The measure has advanced 16 percent this year compared with a 3.5 percent decline for the MSCI Emerging Markets Index. The MSCI World Index has climbed 22 percent in the same period.
Israel’s government last week canceled plans to increase income taxes next year due to excess tax receipts and lower-than-forecast spending. The budget deficit will be 3.5 percent this year compared with a planned 4.65 percent, Finance Minister Yair Lapid said. The central bank has cut the benchmark interest rate to 1 percent from 3.25 percent in 2011.
“The new government has turned around the fiscal position and is committed to a credible medium-term program for further deficit reduction,” analysts including Paul Gamble wrote in the Fitch note. Also, “near-term risks of a military conflict with Iran have eased following the P5+1 deal” on the Persian Gulf nation’s nuclear program, it said.
Exports account for about a third of Israel’s gross domestic product, with Europe and the U.S. among the country’s biggest trading partners. The yield on the nation’s 4.25 percent benchmark notes maturing in March 2023 declined four basis points, or 0.04 of a percentage point, to 3.51 percent.
Teva advanced 1.4 percent to 144.60 shekels, or the equivalent of $41.05, after the shares of the world’s largest generic drug maker closed at $40.76 in the U.S. on Nov. 29. Osem Investments increased for a third day, rising 3.7 percent to a record. The company said last week Nestle SA, the world’s largest foodmaker, paid a premium to raise its stake.
Egypt’s benchmark EGX 30 rose 1.4 percent to 6,267.88 as Telecom Egypt advanced 2.6 percent. The measure lost 4.2 percent last week.
“We’re up after a decent correction last week,” Ashraf Akhnoukh, Cairo-based manager for Middle East and North Africa at Commercial International Brokerage Co., said by phone. “Voting on the first half of the constitution went very smoothly yesterday, so there’s some positive sentiment surrounding that.”
The vote is due to be completed today, the state-run Middle East News Agency reported. It would pave the way for a public referendum and parliamentary elections.
Oman’s benchmark index closed 0.5 percent higher and Qatar’s advanced 0.2 percent, while Saudi Arabia’s Tadawul All Share Index slid 0.3 percent and Bahrain’s gauge lost 0.2 percent. Markets in the United Arab Emirates were closed today for a holiday.
Bank Muscat SAOG gained 2.7 percent, the most since Aug. 19, as Oman’s biggest lender said its insurers agreed to indemnify a $38.8 million loss related to a fraud using prepaid cards.