Tel Aviv shares deepen losses as TA-125 falls 3% on election results

Update, 28 October, 12:07 Israel time

Losses on the Tel Aviv Stock Exchange have deepened, with the TA-125 index now down 3%, according to a later report by Yuval Sadeh on N12. Sadeh described the declines as intensifying and the exchange as diving in reaction to the emerging election results. In the same update he gave two further figures: the TA-90 index of mid-sized companies was down 4.4%, and the insurance sector index had fallen 6%.

News.co.il reported the same three figures a few minutes later, putting the insurance index down 6%, the TA-125 down 3% and the TA-90 down 4.4%, and also linked the slide to the election outcome.

Neither new report gives an updated figure for the banking index or the shekel, and neither says which parties or blocs the market was reacting to. As of these reports there is still no closing figure for the session.

The story as first reported

Share prices on the Tel Aviv Stock Exchange fell sharply as updates on Israel's election results came in, with the benchmark TA-125 index down 1.75% and the banking sector index down 3%, according to a report by Yuval Sadeh on the N12 news channel. The same report said the shekel was continuing to lose ground against the US dollar, with the exchange rate nearing 3.1 shekels to the dollar.

Ynet, the news site of the Yedioth Ahronoth group, reported sharp declines on the exchange after roughly 66% of the votes had been counted. The Times of Israel described the market as slumping against a backdrop of political uncertainty. None of the three outlets gave a closing figure for the session.

What the Tel Aviv Stock Exchange and its indices measure

The Tel Aviv Stock Exchange, often abbreviated TASE, is Israel's only public securities exchange and the main venue where shares of Israeli companies trade locally. The TA-125 is its broadest headline index, tracking the largest listed companies by market value, and it is the figure most commonly cited as a gauge of how the Israeli market is doing on a given day. A fall of 1.75% in that index represents a broad move across the market rather than weakness in a single company.

The banking index tracks the shares of Israel's listed banks. Banks sit at the centre of the Israeli economy, holding a large share of household savings and corporate lending, and their share prices are often watched as a reading of how investors see the domestic economic outlook. In N12's figures, the banks fell further than the market as a whole, by 3% against 1.75% for the TA-125.

The shekel and the dollar

The shekel, formally the new Israeli shekel, is Israel's currency. When it weakens, each US dollar buys more shekels, which makes imports more expensive for Israeli consumers and businesses and raises the cost in shekels of anything priced in dollars. N12 reported that the currency was continuing to weaken, wording that indicates the slide was already under way before the stock market moves it described, and that the dollar was approaching a rate of 3.1 shekels. The report did not give the rate at which the dollar had started the day.

Why election counts move Israeli markets

Israelis vote for parties rather than individual candidates, and seats in the Knesset, the country's parliament, are allocated in proportion to each party's share of the national vote. Because no single party has historically won a majority on its own, a government is formed only after parties negotiate a coalition. That process means the outcome of an election is often not clear on the night, and partial counts can shift as more ballots are tallied.

For investors, that period can bring uncertainty over who will lead the next government, what its economic and fiscal policies will be, and how long it may take to form. The Times of Israel attributed the market's fall to political uncertainty, and N12 linked the declines to updates on the results. Ynet tied the moves specifically to the point in the count at which about two thirds of the votes had been tallied.

How the three reports compare

The three outlets agree on the core event: a sharp fall on the Tel Aviv exchange connected to the election results. They differ in the detail they provide. N12 is the only one of the three to give index figures and the currency rate, so those numbers rest on a single report. Ynet is the only source for the share of votes counted at the time. The Times of Israel item consists of a headline describing the slump and its political backdrop, without figures.

What the reports do not say

None of the reports states which parties or blocs were leading in the count, or what specific aspect of the results investors were reacting to. They do not say whether the figures N12 cited were taken at a particular moment during trading or how the indices moved afterwards. They do not report where the market closed, whether other sectors fell as sharply as the banks, or whether trading volumes were unusual. There is no statement in the material from the Bank of Israel, the exchange itself or the Finance Ministry, and no comment from analysts explaining the moves. The reports also do not say when final results were expected.