Foreign Investors Pull Back Sharply From Tel Aviv Stock Exchange
Translated & summarized from Al-Shams by baba
Foreign investors have drastically reduced their stock purchases in Israel, particularly in the banking sector, while increasing investments in technology and real estate. This trend coincides with upcoming elections and raises concerns about international confidence in the Israeli economy, despite a rise in domestic investment.
The story in 6 lines · by baba
- Foreign investors bought 70% fewer Israeli stocks in the first nine months of 2026 compared to 2025.
- Net foreign purchases of bank stocks reached 4.9 billion shekels in the first nine months of 2026.
- Technology stocks attracted over 4 billion shekels in net foreign investment in the first nine months of 2026.
- Upcoming Knesset elections are cited as a potential factor in reduced foreign investor confidence.
- Domestic investors, including mutual and pension funds, increased their stock purchases.
- The five largest banks saw their market value decrease by approximately 15 billion shekels.
Foreign investors significantly reduced their purchases of Israeli stocks in the first nine months of 2026, buying a net of approximately 2.7 billion shekels compared to 8.9 billion shekels in the same period of 2025, a drop of about 70%. Over the last twelve months, net foreign purchases amounted to only 400 million shekels, a decrease of nearly 95% from the previous period's 7.2 billion shekels.
The banking sector saw a major shift, with foreign investors selling a net of 4.9 billion shekels in bank stocks during the first nine months of 2026, a reversal from net purchases of 6.7 billion shekels in the same period last year. In September alone, net foreign purchases of bank stocks were 142 million shekels, down nearly 77% from 615 million shekels in September 2025. The five largest banks experienced stock price declines in the latter half of September, with Bank Leumi down 3.7%, Bank Hapoalim 4.6%, First International Bank 3.7%, Mizrahi Tefahot Bank 3%, and Discount Bank 3.7%. The total market value loss for these five banks reached approximately 15 billion shekels.
Despite the overall decline, foreign investment did not exit all sectors. Technology stocks attracted over 4 billion shekels in net foreign investment in the first nine months of 2026, an increase from 2.5 billion shekels in the same period last year. Real estate stocks also saw net foreign investment of about 2.1 billion shekels.
An economic analysis suggests that political and economic uncertainty, particularly with the upcoming Knesset elections on October 27, may be contributing to the reduced appetite of foreign investors. However, available data does not solely attribute the decline to the elections. Conversely, domestic investor activity increased, with local mutual funds making net stock purchases of 8.4 billion shekels since the start of the year, and pension, insurance, and savings funds buying 4.5 billion shekels. This indicates that while foreign capital is receding, overall stock market activity may not be declining, but it raises questions about international investor confidence in the Israeli economy.
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