Israel-exposed stocks fall on fears of escalation in Middle East conflict
(Updates throughout with details on U.S.-listed shares, more background)
(Updates throughout with details on U.S.-listed shares, more background)
By Danilo Masoni and Sruthi Shankar
Oct 9 (Reuters) - Shares in U.S. and European-listed companies with business exposure to Israel fell on Monday on worries that an escalation in conflict with Palestinian Islamist group Hamas would impact their operations.
The fighting over the last two days has roiled global markets. Wall Street was set to open lower, while European stocks dipped as surging oil prices fanned inflation worries and investors fled to the safety of government bonds and the dollar.
U.S. shares of Israeli chipmaker Tower Semiconductor (TSEM.O) fell 4.5%, while Intel (INTC.O) dropped 1.6% and Nvidia (NVDA.O) 2.5% in premarket trading.
Intel had in June agreed to invest $25 billion on a new factory in Israel, which Prime Minister Benjamin Netanyahu called the largest-ever foreign investment in the country.
Energy and defense stocks on both sides of the Atlantic rose, while airline shares dropped on fears of higher fuel costs and as several carriers suspended flights to or from Tel Aviv.
Fuel-related worries also hit shares of U.S. cruise operators Norwegian Cruise Line Holdings (NCLH.N) , Carnival (CCL.N) and Royal Caribbean Group (RCL.N) , which were down about 3%.
“If the war remains confined between Israel and Palestinians, it’s likely that the markets will forget about it after a few days,” Raffi Boyadjian, lead investment analyst at XM said in a note.
“However, even if that turns out to be the case, the long-term peace prospects have diminished as the violence has probably dampened hopes of a normalization of relations between Israel and regional power Saudi Arabia.”
Israel’s troops were fighting to recapture towns from Hamas gunmen who killed 700 Israelis and seized hostages, even as the country responded with its heaviest ever bombardment of the Gaza strip, killing more than 400 people.
The army said it would soon go on the offensive after the biggest mobilisation in Israeli history.
U.S.-listed shares of Israel’s Teva Pharmaceutical (TEVA.N) (TEVA.TA) , the world’s largest generic drugmaker, fell 4.4%, while those in fertilizer group ICL Group (ICL.N) (ICL.TA) dropped 2.3%.
Cybersecurity firm Check Point Security (CHKP.O) slipped 1.9%, with J.P.Morgan noting the company has 60% office space and 42% employees in Israel.
Other cybersecurity companies with “meaningful” exposure, according to the brokerage, included SentinelOne (S.N) and CyberArk (CYBR.O) , which were down 1% and 2.8%, respectively
Energean (ENOG.L) fell as much as 16.8% in London, making the UK and Israel-listed oil producer focussed on the Eastern Mediterranean the top loser on the region-wide STOXX Europe 600 (.STOXX) benchmark index.
Energean said the northern area of Israel, where its operations are based, was currently not under attack and that production, supply and offshore work were ongoing.
London-listed shares in BATM Advanced (BVC.L) (BVC.TA) fell 8.5% even as the Israel-based technology firm said it did not expect the conflict to have a material impact on trading.
U.S. exchange-traded funds exposed to Israel such as the iShares MSCI Israel ETF (EIS.N) and the ARK Israel Innovative Technology ETF (IZRL.N) fell 6.4% and 3.3%, respectively.
In India, shares of Adani Ports And Economic Zone (APSE.NS) , which owns the shipping container and tourist cruise Haifa Port in Northern Israel, fell as much as 5.2%. Adani Ports said the port was operational.
WRAPUP 5-Clashes in Israel rage on as Hamas fighters still hold out
