Lior Vider said tase strength is being carried by a few heavyweight stocks even as most names weaken. This year, the Tel Aviv 35 Index has risen 16.3% and the Tel Aviv 125 Index 10.9%, yet 70 of the 125 stocks in the Tel Aviv 125 Index have negative returns.
Tel Aviv 35 Index gains
Vider, an analyst and portfolio manager, wrote this week after a day when the Tel Aviv 35 Index rose: "Beneath the surface, however, the picture is quite different. In most trading sessions, the strength of the leading indices rests on a handful of heavyweight stocks, headed by semiconductor stocks Tower and Camtek, which have risen sharply lately, and they obscure the real trend. In actual fact, most of the market suffers from deep weakness,"
The numbers back that split. About 340 stocks on the Tel Aviv Stock Exchange have fallen this year, compared with 190 that have risen. That means the index advance has not lifted the broader market evenly; it has depended on a narrower group of leaders while many holders of smaller names have sat on losses.
Tel Aviv 90 Index falls
The Tel Aviv 90 Index shows the weakness more plainly. It has fallen 6.5% so far this year and 11% in the past month, a sharper move than the headline gains in the larger indexes suggest. On the same exchange, 55 stocks are at a 52-week low and those shares trade, on average, 45% below their 52-week highs. Only four stocks are at an annual peak.
Yaniv Pagot, Tel Aviv Stock Exchange EVP Trading, indexes and Derivatives, said the split is part of a selective market. "That’s the beauty of a market in which there’s selectivity" he said. "The market knows how to differentiate. The market is working, it’s not broken," He added that "The higher the level of liquidity - and it’s at a peak level on the stock exchange these days - the easier it is for this to manifest itself."
Tower and Camtek lead
Anatoly Zeiman, head of Foreign Securities at the Tel Aviv Stock Exchange, wrote last week that "The rises in the indices are driven by a small handful of big companies, while most companies on the market are traded on a declining trend or" Tower and Camtek have been among the heavyweight names supporting the leading indices after sharp recent gains. The same pattern has also appeared in US markets, where index levels can rise even while many shares lag.
For investors, the practical reading is simple: the headline averages do not describe every portfolio equally. Anyone holding a broad basket of weaker names has seen a very different year from someone concentrated in the few stocks powering the Tel Aviv 35 Index and the Tel Aviv 125 Index.
