Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

18 Adar 5764 - March 11, 2004 | Mordecai Plaut, director Published Weekly









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Shema Yisrael Torah Network
Shema Yisrael Torah Network











Ten Year Israeli Stock Performance
by Yated Ne'eman Staff

In January and February 1994, there were 59 initial public offerings (IPOs) on the Tel Aviv Stock Exchange, an unusually large number. An IPO is an offering of stock by a company to the public. Now, ten years later, this is a summary of what happened with them. It should be noted that these figures are typical for any stock market, and better than many stock markets. Buying stock at the IPO is often thought to be a sure thing, but this perspective shows that this is not so.

At the bottom of the list are 27 percent of the companies that have collapsed, gone into liquidation or caused investors to lose more than 90 percent of the money they invested at the IPO. The rest did better, but many are still far from good.

Of those companies, 17 percent of them were delisted. This means that they were taken off the stock exchange by the owners. Generally it means that the majority shareholders bought back all of the stock that was in the hands of the public. In most cases, the buy-back was below the IPO level. In some cases, the offer arrived just before an upturn in the company's fortunes.

The next segment are the 32 percent that generated negative real returns. These did not hold their value since the comparison is to an investment that is linked to the cost of living that only preserved the value.

Another 10 percent generated positive real returns, but still less than short- term Bank of Israel certificates, the most conservative investment in Israel. The investors accepted the high risk, but received less reward than they'd have received on the lowest-risk shekel assets.

The top group were the 14 percent of the companies exceeded the yield on short- term Bank of Israel makam certificates. One out of seven was a good investment.


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