Bloomberg News

Israel Stocks Fall on Concern Syria Tension to Hit Economy (1)

May 05, 2013

The TA-25 benchmark stock index fell to the lowest in almost a week on concerns an escalation of clashes with Syria could lead to a call-up of reserve-duty soldiers, hurting economic growth.

The benchmark dropped as much as 0.4 percent and closed 0.1 percent lower at 1,203.01 in Tel Aviv. The measure has gained 4.9 percent in the past 12 months, the second-least among 24 developed equity markets compiled by Bloomberg. The Nasdaq Composite Index gained 1.1 percent on May 3.

“The market is experiencing some jitters connected to weakened geo-political events, including reports that Israel is attacking targets in Syria,” Zach Herzog, head of international sales at Psagot Investment House Ltd. in Tel Aviv, said today by phone. “Investors are concerned about an escalation that could lead to a call-up of reserves that could have economic consequences.”

About 2,000 reservists took part in a surprise drill in the north of the country, Israel radio reported on April 30. An army spokesman said the drill was routine and scheduled. Israel deployed two Iron Dome batteries in the North, the army said today, as part of a routine operational deployment program.

A fireball exploded over Damascus early this morning as Israeli missiles hit a target on the hilly outskirts of the city, the Syrian state news agency said. It was the second such reported attack in less than a week, neither of which has been confirmed. An air strike on May 3 against Syria targeted a shipment of missiles believed to be bound for Lebanon’s Hezbollah, the Associated Press reported yesterday, citing unidentified Israeli officials.

Lagging Performance

Increased geopolitical uncertainty and the continuation of the civil war in Syria contributed to an under-performance of the stock market in 2012 compared with other markets, the central bank said in its 2012 annual report. The TA-25 gauge advanced 9.2 percent in 2012 compared with a 16 percent rise in the Nasdaq Composite Index and a 29 percent gain in the DAX Index, according to data compiled by Bloomberg.

Economic growth is forecast to slow to 2.8 percent this year, from 3.2 percent in 2012, excluding first-time natural-gas revenue, according to the central bank.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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