The Tel Aviv stock exchange has gone bullish after weeks of falling prices. The biggest gains are in the shares of commercial banks, now backed by a government guarantee to redeem them at their October 5, 1983 Dollar value if they are held from 4-7 years, plus interest of up to seven percent per annum.
The October 5 date is important because since then commercial bank shares lost about 70 percent of their Dollar value as they were dumped en-masse in anticipation of a drastic devaluation of the Shekel.
The Treasury has gone all-out to shore up the bank shares to encourage savings and slow down runaway inflation. What is described as a “mini-boom” on the stock exchange was triggered not by the government’s guarantee however but by the First International Bank of Israel.
The latter bought up large quantities of other bank shares at low prices and is marketing them on the promise of a high yield long-term savings scheme. This is based on the presumption that with the Treasury’s backing, the price of the shares will rise in the months ahead.
Other investors followed suit. The price of bank shares has gone up some 15 percent in the past two days.
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