The Tel Aviv Stock Exchange took a plunge Thursday, with the leading share index going down 4 percent in a day of hectic trading.
The slump follows a week of nervous ups and downs, which traders explained as being the result of negative statements by public officials and reaction to declines on Wall Street.
Earlier in the week, Jacob Frenkel, governor of the Bank of Israel, and Finance Minister Avraham Shohat cautioned Israelis about over-investing in the stock exchange, warning that the market was liable to drop.
Thursday’s slump was also linked to initial declines on Wall Street after U.S. President Clinton announced his new economic program. Although the New York slippage eventually halted, Israeli shares traded on Wall Street fell heavily.
A third cause of the Tel Aviv slump, according to brokers and traders, was a statement made by retired Supreme Court Justice Moshe Beisky on Wednesday in which he accused mutual fund directors of manipulating share prices.
Many Israelis who do not invest directly in the market put money into mutual funds, usually via their bank branch.
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