Equities: Political Risks Will Weigh On Market Further

A host of factors, both political and economic, have prompted us to take a bearish outlook on Israel's Tel Aviv 100 (TA100) equity index. The index, which closed the week on September 8 at 954, registered its lowest weekly close since November 2009, and we believe further losses are likely. The TA100 tested key support at the 920 level in recent days, and we believe the index could decline to the 880 level over the coming weeks (implying losses of 7.8%). Israel's growth momentum has been slowing since Q210, especially on the back of weak external demand in key export markets and the composite state-of-the-economy index has been on a decelerating path in year-on-year terms since October 2010.

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