Summary:
Yields to maturity, both nominal and real, declined moderately in 2004, following a relatively sharp decline last year. The nominal yields reached a similar average level to those at the end of 2001, and the real yields reached a lower level. In the first half of the year the yields on medium- and long-term bonds increased, while during the second half the yields for all terms declined, especially the short and the medium.
Share market prices rose moderately this year-as opposed to the sharp increases recorded in 2003-with a sharp rise of turnovers in shares and in derivatives on the share index, to record heights. In the Treasury-bill and government-bond market, trade turnovers increased impressively this year, reaching a higher level than in previous years.
The volumes of activity in derivative financial assets were characterized in 2004 by a mixed trend: trading volumes in interest-rate derivatives in the banking system and the stock exchange contracted, against the background of the decreased uncertainty, which was reflected in the prices of options, and in the low volatility characterizing the exchange rate this year. As opposed to these, the volume of trade in share derivatives traded on the Tel Aviv Stock Exchange increased, and especially the volumes of activity in interest derivatives and CPI derivatives offered by the banks. The Maof clearing house at the stock exchange inaugurated a real-time security-control system in 2004, whose characteristics are detailed in Section 5.
During the year, the government reduced the deficit and the net negotiable domestic borrowing; at the same time the volumes of issues in the corporate bond market, the stock market and the convertibles market grew sharply.
Chapter 4: The Securities Market - PDF file