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Citigroup cuts Israel on inflation
Real estate news By Seda Sezer
Oct 16, 2007 8:33
Citigroup Inc. downgraded Israeli stocks to "underweight," citing expectations of "modest" earnings growth, while saying interest rates need to rise further to stem higher inflation.
Israeli companies have said in the past week that a surge in inflation may add to their financial costs in the third quarter. Africa Israel Investments Ltd., the country's largest real estate company, said October 11 that it will post a "significant" increase in expenses. Housing & Construction Holdings Ltd., the biggest builder, said Sunday that financial costs may rise by about NIS 75 million after the consumer price index advanced 2.5 percent in the June-September period. Strauss Group on Monday said inflation may lift its financing costs.
At the same time, the firm boosted its recommendation on Turkish equities to "overweight" from "underweight," citing the outlook for improved earnings at the country's banks, which it said offer "good" growth at interest rates decline.
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