Israeli Market Experts Predict Profitability by 2027 Amidst Global Uncertainty
Translated & summarized from Calcalist by baba
Israeli financial experts predict profitability in the country's debt and equity markets by the end of 2027, despite a potentially challenging path. Key factors discussed include US interest rates, the impact of AI, and geopolitical developments. Experts anticipate economic growth exceeding 5% if the war concludes favorably by late 2026. Despite concerns about Israel's rising debt-to-GDP ratio, foreign investor interest in the local market remains high.
The story in 6 lines · by baba
- Israeli markets are expected to be profitable in both debt and equities by the end of 2027, according to financial experts.
- US Treasury yields exceeding 5% are a key focus, with uncertainty about whether this is a new normal.
- Economic growth in Israel could surpass 5% if the war ends by late 2026 with a favorable agreement.
- Artificial Intelligence is seen as a major macroeconomic trend requiring significant investment and potentially impacting inflation.
- Despite an increase in Israel's debt-to-GDP ratio, foreign investor interest in the local market is at an all-time high.
- Experts believe the Bank of Israel has room for further interest rate reductions.
Israeli financial experts expressed optimism about the country's market performance by the end of 2027, anticipating profitability in both debt and equity components despite potential challenges. Yaniv Pagot, Head of Markets Division at the Tel Aviv Stock Exchange, stated that even with a "winding path," the outcome by 2027 will be profitable.
During a panel discussion at Calcalist's Investment Week, participants discussed key factors influencing future markets. Ronit Harel Ben-Ze'ev, CEO of S&P Maalot, highlighted the significance of US Treasury yields, noting their recent rise above 5% and questioning whether this represents a "new normal" or a temporary situation dependent on positive developments in Iran and US inflation.
Yaniv Bar, Head of Economics at Bank Leumi, focused on the risk premium of the Israeli economy. He suggested that if current trends continue, including a resolution to the war by late 2026 with a favorable agreement for Israel and a single election cycle, the economy could see growth exceeding 5%. Bar also indicated that the Bank of Israel has room to further reduce interest rates.
Moran Elon, CEO of the Israeli representation of Pictet Bank, identified three key areas: the cost of capital influenced by US interest rates, the macroeconomic impact of Artificial Intelligence requiring significant investment and potentially leading to inflation before productivity gains, and the importance of diversification beyond the US to Europe, alongside a strong bond market offering better yields than in the past.
Pagot further elaborated on market dynamics, suggesting that the Federal Reserve may need to implement quantitative easing to lower US Treasury yields, which are currently too high for sustainable business and economic activity. Harel Ben-Ze'ev addressed Israel's sovereign debt, noting an increase in the debt-to-GDP ratio to around 70% and questioning the sustainability of recent tax revenues. She also pointed to the stability of the monetary sector, low external debt, and sufficient reserves. Regarding foreign investors, Pagot asserted that their interest in the Israeli market is at an all-time high, citing a recent large transaction on the stock exchange.
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