TEL AVIV (Oct. 23)
The Tel Aviv stock exchange prepared to reopen tomorrow after a two-week suspension of trading amidst reports of a serious business slowdown reflected in a dramatic decline of demand for consumer goods and services.
The stock exchange closed down on October 9 in order to end the panic sale of commercial bank shares in the face of a rapidly weakening Shekel. Investors were liquidating their shares to buy U.S. Dollars and other foreign currencies. The value of the shares when the exchange reopens tomorrow morning is unpredictable. A government scheme to sustain the shares at a realistic price is still under negotiation.
The banks reported today that there was no particular rush of buy or sell orders to brokers in anticipation of resumed trading. The orders are being fed into computers at the stock exchange, the Finance Ministry and the Bank of Israel to try to determine whether the trend will be up or down. The extent to which the government will support the bank stock is expected to depend on the information generated by the computers.
The government is expected to intervene promptly to halt any sudden run on bank shares which could force them to dangerously low levels. Kibbutz industries and various economic bodies have announced that they will not be selling their bank shares in any haste. Most economists agree that the shares will continue to be a good and safe investment.
Nevertheless, police will be on duty in force at the stock exchange and bank branches tomorrow to deal with any angry outbursts by investors.
BUYING SPREE REVERSES ITSELF
Meanwhile, Zvi Amit, Director General of the Chamber of Commerce, reported Friday that the buying spree which preceded the 23 percent devaluation of the Shekel two weeks ago has reversed itself. The 10 largest construction companies reported a continuing decline in sales, a trend that dates from the start of the year, Only 373 new flats were sold in September compared to 628 flats in August.
Building contractors are complaining of a credit shortage. Most importers have stopped releasing goods from customs because of credit difficulties.
The demand for electrical appliances dropped, off sharply after their price increased by 30 percent following devaluation. A 30-40 percent drop was reported in orders for new cars. Restaurants, entertainment establishments and book stores reported a sharp decline in business.