Tel Aviv braces for more losses as Asian stocks plummet

Shanghai reels as stock exchange plummets over 8%, day after Israeli exchange records largest drop since 2011

Illustrative photo of a board showing stock fluctuations at the Tel Aviv stock exchange (photo credit: Moshe Shai/Flash90)
Illustrative photo of a board showing stock fluctuations at the Tel Aviv stock exchange (photo credit: Moshe Shai/Flash90)

Israeli investors were bracing for more losses early Monday, after Tel Aviv’s stock index dropped more than four percent the day earlier amid fears of a new global financial crisis as stocks in Asia continued to plummet.

Both the benchmark TA-100 and TA-25 indices on the Tel Aviv Stock Exchange opened the trading day with 3.7 percent drops as of 10 a.m. Monday.

A day earlier, the TA-100 index recorded the worst day of trading since September 2011, plummeting 4.1 percent while total turnovers reached some NIS 1.4 billion ($360 million), with bio-med and small shares leading the drop.

The downward trend is expected to continue through Monday, as Shanghai’s stock exchange receded more than 8% on morning trading, leading a bloodletting across Asian markets.

Tokyo’s Nikkei exchange dove 3.09% by late morning and Seoul lost 1.88% — further extending heavy losses from last week.

“Today has all the hallmarks of being one of the worst trading days of the past five years,” said Evan Lucas at IG Markets.

“The reaction from Asia today will be symptomatic of the current investor sentiment and belief that a hard landing (in China) is inevitable.”

In Israel, the Bank of Israel is expected to announce new interest rates Monday afternoon.

Analysts suspect the central bank may set the rate at a new historic low, given the stock market dive and a recent report showing slumping economic growth and exports in Israel, financial daily Globes reported.

The interest rate is currently set at 0.1%, itself an all-time low.

The losses early Monday followed a steep fall in US and European stocks on Friday, while several commodities plunged to multi-year lows and emerging market currencies took a battering.

Oil prices fell after slipping below $40 a barrel for the first time in six years and global equities have lost more than $5 trillion in value since China’s shock currency devaluation on August 11 sparked fears the world’s number two economy is slowing more than thought.

Wall Street saw heavy falls on Friday, with the Dow Jones Industrial Average posting its worst single-day sessions in four years, after data showing Chinese manufacturing activity slowed to a 77-month low added to the gloomy picture.

The Tel Aviv stock market trades from Sunday to Thursday in tandem with the standard Israeli working week.

Finance Minister Moshe Kahlon on Sunday called a meeting of industry and export leaders after figures published last week showed an economic slowdown.

The economy grew just 0.3% during the last quarter and 2% during the first quarter of 2015 compared to 6.2% in the last quarter of 2014.

Steve Winer Contributed to this report.

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