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Investors can hope for new highs as TASE to launch cannabis index

TA-Cannabis to kick off in February with shares of 9 medical cannabis firms; trading not allowed on index initially

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

The Tel Aviv Stock Exchange, December 25, 2018. (Adam Shuldman/Flash90)
The Tel Aviv Stock Exchange, December 25, 2018. (Adam Shuldman/Flash90)

The Tel Aviv Stock Exchange said on Monday that it would launch in February a new index consisting of the shares of companies traded on the market that are engaged in research, cultivation, sale and production of medical cannabis.

The Israeli medical cannabis industry has evolved in recent years and, while not yet mature, has garnered the interest of the players in the capital markets. Accordingly, on November 1, 2020, the TASE set up a newly dedicated cannabis subsector, within the biomed sector.

The shares of these companies will now be part of the new TA-Cannabis index, which will include nine firms with a market capitalization of a total of NIS 1.7 billion ($529,000) and a float value of NIS 0.7 billion, the TASE said in a statement.

Because of the highly speculative nature of these firms, and because the market cap of the nine companies included is low, the index initially will not qualify as an asset for Exchange Traded Funds, which are mostly funds that hold the same securities of certain indices, or other index-tracking financial products, and investors will be able to invest only directly into the shares of the companies themselves, as before, the exchange said in the statement.

A worker tends to cannabis plants at a growing facility for the Tikun Olam company near the northern city of Safed, August 31, 2010. (Abir Sultan/Flash90)

The index will represent a sort of a bellwether for investors, to see how the shares in the sector are performing, the statement said.

The nine firms in the index are InterCure, which as of December 24 had a market valuation of NIS 425 million and a weight of 15% in the index; Panaxia Israel, with a NIS 313 million valuation and a weight of 15%; Search Medical with a market cap of NIS 229 million and a 15% weight; Tikun Olam Cannbit, with a market cap of NIS 200 million and 12.77% weight; Together, with a NIS 144 million market cap and 10.82% weight; Pharmocann, with a NIS 127 million market cap and 10.31% weight; Intelicanna, with a market cap of NIS 118 million and 7.95% weight; Cannassure, NIS 84 million, weight 7.11%; Univo, market cap NIS 85 million, 6.05% weight in the index.

The coronavirus pandemic has been a boon for the Tel Aviv Stock Exchange, which has seen the number of companies holding an initial public offering of shares surge to 27, the highest number since 2007. Nineteen of these firms were tech firms. Three firms dual-listed their shares in the exchange, bringing the total number of new companies added this year to 30. Five additional firms entered via shell companies. Dozens of other tech firms are expected to issue shares on the exchange in the coming months, the TASE said in a statement earlier this month.

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