Israel Stocks Drop to Lowest Since 2014 as Bear Market Nears

  • TA-25 Index declines almost 20 percent since August peak
  • Export-driven economy caught in global market turmoil

Israeli stocks retreated to the lowest level in almost 18 months amid a global selloff, nearing the country’s first bear market since 2011.

The TA-25 Index lost 2.8 percent to 1,383.34, the weakest level since August 2014. The gauge was about four points away from the threshold for a bear market after slumping almost 20 percent since a recent peak in August.

Mylan NV led the declines, dropping 18 percent after the drugmaker agreed to buy Meda AB in a cash and stock deal worth about $7.2 billion. Teva Pharmaceutical Industries Ltd. fell 5.6 percent after sales of its blockbuster drug missed fourth-quarter profit estimates.

“Tel Aviv’s main index is nearing bear territory as concerns over global growth and deflation mount,” said Saar Golan, a Tel Aviv-based trader at Bank of Jerusalem Ltd. “Israel’s biggest trading partner is the European Union and therefore it cannot escape the turmoil around the world.”

Israel is joining a global selloff after Federal Reserve Chairwoman Janet Yellen on Wednesday highlighted uncertainty over the pace of China’s growth and the related rout in commodities. Shares in Tel Aviv have had the worst start to a year since 2008 as appetite for riskier assets declined on concern economic expansion worldwide may slow. 

The Bank of Israel has been trying to spur growth in the export-driven economy, following the slowest annual expansion in six years. More than a third of Israel’s exports go to Europe.

Bearish Signals

Trading patterns on the TA-25 Index are showing some bearish hints, with its moving average convergence divergence, or MACD gauge, lower than the signal line. The gauge’s 14-day relative-strength index dropped to 29; a reading below 30 indicates to some investors that a security has been oversold and is due to reverse.

Petach Tikva, Israel-based Teva said Thursday revenue from multiple sclerosis treatment Copaxone declined 14 percent to $960 million. Analysts had predicted $1 billion in sales. The company has the second-biggest weighting on the TA-25 after Perrigo Co. Plc.

The country’s 1.75 percent benchmark bonds due 2025 rose to 100.73 agorot on the shekel, the highest close since the notes started trading in May. One-year interest swaps, an indicator of where investors see borrowing costs during the period, slipped to 0.07 percent as of 5:39 p.m. in Tel Aviv, the lowest since October on a closing basis.

Before it's here, it's on the Bloomberg Terminal.