The dramatic collapse of the shares in Tel Aviv, echoing the financial thunder heard around the world, has driven prices down by more than 40 percent as measured by major indices. Brave buyers who bought at what appeared to be bargain prices two months ago are counting their losses, but eventually the bottom, like the top, will arrive.
Politicians have jumped on the drop in the market to complain that pension funds have lost more than five percent in the values of their portfolios and that some investors' holdings have dropped more than 50 percent. Several party leaders have blamed former Finance Minister Binyamin (Bibi) Netanyahu's economic reforms for the current slowdown in economic growth.
However, a look at the charts shows that investors reaped huge profits the past five years.
The Tel Aviv 100 average, covering 100 popular stocks, was below 450 points in 2004 and then climbed to 950 by the end of 2006 as the Israeli economy soared, buoyed by Netanyahu's reforms. The index continued to rise in 2007 and reached 1200 in 2007 and in the beginning of this year.
Doom and gloomers warned at the time that things were getting out of hand, but investors considered a drop to 900 to be a bargain buying opportunity. They drove the index back above 1000 before the continuing financial crises in the
Bank HaPoalim and two large worldwide potash producers based in
Israel Chemicals and Makhteshim rode a one-way street the past year as potash prices soared. Israel Chemicals rose from 39 to 72 shekels a share, but it has crashed to 37 as the worldwide commodities bubble burst.
Bank HaPoalim share prices in the past four years rose from 7.5 shekels to 22, but now are down to 9.5 shekels.
"Monday morning quarterbacks" will know in a few months if the bottom has been reached, but most analysts agree that the current prices reflect panic and distrust in the entire financial system, more than a lack of value.
They also point out that