As stocks in Asia continue to plummet, Israeli investors are bracing for heavy losses Monday after Tel Aviv’s stock index dropped more than four percent over the weekend.
Fearing a new global financial crisis, Tel Aviv’s TA-100 Index saw its worst day of trading Sunday since September 2011, falling 4.10 percent. Total turnovers reached approximately NIS 1.4 billion ($360 million) with small shares and bio-med companies leading the drop. At the close on Sunday, the TA 25 Index lost 4.08 percent, hitting a new three month low.
Shanghai’s stock exchanged opened with an eight percent drop on Monday, throwing Asian markets into a frenzy. Tokyo’s Nikkei fell 3.09 percent by late morning and Seoul’s exchange dove by 1.88 percent.
Monday’s early losses follow a Friday nosedive in US and European stocks. The emerging currencies market plummeted with several commodities reaching historic lows.
The Dow Jones Industrial Average posted its worst single day in four years on Friday, closing down 530 points, the ninth-largest point decline in history. Last week alone, the Dow finished at 16,459, falling more than 1,000 points throughout the week. At the opening bell Monday, the Dow dropped more than 1,000 points during the first few opening minutes of trading.
Oil dropped to $40 a barrel for the first time in six years and global equities have lost more than $5 trillion in value since China’s currency devaluation earlier in August.
Financial daily Globes reported that the Bank of Israel, attempting to offset heavy losses, will announce new interest rates Monday afternoon. Israel’s central bank may set the rate at an all-time low to help boost economic growth. Currently, the interest rate in Israel is set at 0.1 percent, the lowest it has ever been.
On Sunday, Finance Minister Moshe Kahlon called a meeting of industry leaders following a report showing a major economic slowdown in Israel. Over the last quarter, Israel’s economy grew just 0.3 percent and 2 percent during the first quarter, compared to 6.2 percent of growth in the last quarter of 2014.
A Finance Ministry report revealed that Israel’s growth is behind that of many struggling OECD countries including Greece, Spain and the Eurozone. The only countries with lower growth rates than Israel were France, with zero growth, and Japan, which had a negative growth of 1.6 percent.
“Israel’s GDP growth slowdown in the second quarter puts Israel in a position of inferiority when viewed in the context of international comparison, with lower growth than in most developed countries,” the report stated.
Kahlon expressed his worry about Israel’s financial stability and its economic future in such an unstable world market. “The figures pointing to a decrease in growth worry me as finance minister and as a citizen of the State of Israel,” he said. “As a huge believer in Israeli industry, I plan on acting to strengthen and develop industry in Israel and ease restrictions.”