Bloomberg News

Gaza Strike Spurs Biggest Drop in Three Months: Israel Overnight

November 15, 2012

Israel's Prime Minister Benjamin Netanyahu

Benjamin Netanyahu, Israel's prime minister, said that “if there is need, the Israeli military is ready to broaden the operation.” Photographer: Scott Eells/Bloomberg

Israeli stocks traded in New York tumbled the most in three months and Mellanox Technologies Ltd. (MLNX:US)’s U.S.-listed shares sank as the conflict in the Gaza Strip escalated.

The Bloomberg Israel-US Equity Index (ISRA25BN) of the most traded Israeli companies in New York retreated the most since Aug. 13, losing 2.1 percent to 82.24. Mellanox, the Yokneam Elit, Israel- based maker of products used to transfer and store data, plunged 3.9 percent, widening its discount (MLNX:US) to its Israeli-traded shares to $2.

Israeli jets struck the Gaza Strip yesterday, killing the leader of Hamas’s military wing as the army said it called up reserves and pledged the use of ground troops if required to end attacks on its citizens. Prime Minister Benjamin Netanyahu said in a televised address that “if there is need, the Israeli military is ready to broaden the operation.” In the U.S., stocks fell for a second day on concern President Barack Obama won’t be able to reach a budget-deficit reduction deal.

Investors are fearing “the possibility of this escalating into a ground operation that can be extended and have repercussions not only for human life but for the overall economy,” Chaim Fromowitz, executive vice president of Bank Leumi USA, a unit of Israel’s largest lender, said by phone from New York. “The uncertainty in the market is already high with concerns about U.S. finances, so when you have two trends like this coming together it has a compounded, severe effect.”

Cellcom Israel Ltd. (CEL:US) and Partner Communications Co., the nation’s largest mobile-phone companies, led declines in the Bloomberg Israel-U.S. Index, dropping more than 5.9 percent.

‘Clear Message’

The Tel Aviv benchmark TA-25 Index (TA-25) lost 0.9 percent to 1,178.00 at 10:14 a.m. in Israel, the lowest since Sept. 24.

The shekel gained 0.1 percent to 3.9676 a dollar after sinking yesterday to the lowest level in two months. It was the second-worst performer after the South African rand among 10 emerging-market currencies in Europe, the Middle East and Africa tracked by Bloomberg yesterday.

The Israeli army said Ahmed al-Jabari was targeted by a “surgical strike” and identified him as a senior figure “who served in the upper echelon of the Hamas command and was directly responsible for executing terror attacks,” according to an e-mailed statement.

“Today we delivered a clear message to Hamas and other terrorist groups,” Netanyahu said yesterday in a televised address.

The Israeli strikes follow a barrage of more than 115 rockets from Gaza into Israel this week, adding to a total of about 14,000 missiles fired from the territory in the past 11 years, according to the Israeli Defense Ministry.

‘Move Around’

Mellanox tumbled (MLNX:US) to $83.49 taking the U.S. shares’ discount to the largest since Oct. 19, according to data compiled by Bloomberg. The Tel Aviv shares dropped 3.1 percent today to 329.1 shekels, or the equivalent of $82.92.

“These shares can move around when there’s border tension,” Brian Freed, an analyst at Wunderlich Securities Inc. who has a buy rating on the shares, said by phone from Denver yesterday. Mellanox “was off because of what happened in Gaza overnight,” Freed said.

Cellcom, Israel’s largest mobile phone operator, retreated 5.9 percent to $8.55. The stock of the Netanya, Israel-based company slid 3.2 percent to 34.6 shekels today in Tel Aviv, or the equivalent of $8.72. Partner (PTNR:US), the second-largest carrier, plunged 6 percent to $5.52. The Tel Aviv shares of the Rosh Ha’Ayin, Israel-based provider lost 1.5 percent to 22.16 shekels, or the equivalent of $5.59.

Tower Semiconductor Ltd. (TSEM), the Migdal Haemek, Israel-based maker of customized computer chips, declined 3.2 percent to $7.30. The shares today in Tel Aviv dropped 4.3 percent to 28.32 shekels, or the equivalent of $7.14.

The semiconductor company today reported third-quarter revenue dropped 12 percent to $155 million, its first quarterly decline since 2005. The mean estimate of three analysts surveyed by Bloomberg was $157 million.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • MLNX
    (Mellanox Technologies Ltd)
    • $43.89 USD
    • 0.07
    • 0.16%
  • CEL
    (Cellcom Israel Ltd)
    • $11.78 USD
    • 0.09
    • 0.76%
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