Israeli Stocks Fall Amid Election Uncertainty While Wall Street Hits New Highs
Translated & summarized from Ice by baba
The Tel Aviv Stock Exchange fell sharply by over 3.5% this week due to election uncertainty and security concerns, contrasting with Wall Street's record highs. Foreign investors were net buyers, while domestic institutions increased tech holdings. The bond market also declined amid rising global yields, and the shekel strengthened against the dollar despite global trends.
The story in 5 lines · by baba
- Israeli stock market indices dropped significantly amid election uncertainty and security fears.
- Foreign investors were the largest net buyers in the stock market this week.
- The local bond market experienced declines as global yields continued to rise.
- Despite global trends, the Israeli shekel strengthened against the US dollar.
- Money market funds saw significant inflows while passive funds experienced outflows.
The Tel Aviv Stock Exchange (TASE) experienced significant declines this past week, with the TA-125 index dropping 3.6% and the TA-35 index falling 3.7%. This downturn is attributed to increased political uncertainty surrounding upcoming elections, concerns over potential security escalations, and global bond market pressures. Despite the weekly losses, the TA-35 and TA-125 indices still show positive year-to-date returns of 11.9% and 7.2%, respectively. The insurance sector continues to lead year-to-date gains with a 34.8% increase, while defense, biomedical, and construction sectors saw the largest weekly drops.
Foreign investors were net buyers in the stock market, purchasing approximately 672 million shekels ($180 million) worth of shares, primarily in insurance, biomedical, and banking stocks. Domestic institutional investors increased their exposure to the technology sector, buying about 308 million shekels ($83 million) in tech stocks. Meanwhile, the public continued to increase its investment in international markets, buying approximately 195 million shekels ($52 million) in foreign funds this week.
The local bond market also saw declines, with both government and corporate bonds losing value as global yields continued to rise. Long-duration bonds were particularly affected, with the Tel-Gov 10+ and 15+ indices falling around 1.8%. The yield on 10-year Israeli government bonds rose to approximately 4.21%, and the 3-year yield increased to 3.86%. Corporate bond indices dropped between 0.4% and 0.7%.
In the capital markets, companies Flying Spark and Yissudot Etanim raised about 2.7 million shekels ($720,000) through rights issues, and Michal Pkadonot raised 0.5 billion shekels ($133 million) via a bond series expansion. The Ministry of Finance, however, continued its intensive fundraising, having raised about 115 billion shekels ($30.7 billion) year-to-date and planning to raise approximately 11.2 billion shekels ($3 billion) in October. The government deficit remained stable at about 3.2% of GDP.
The mutual fund market saw net inflows of 371 million shekels ($99 million) this week, bringing year-to-date inflows to 54.3 billion shekels ($14.5 billion). However, passive funds, particularly exchange-traded funds tracking major stock indices, experienced outflows of about 672 million shekels ($180 million) due to election uncertainty. Money market funds, conversely, saw significant inflows of 1.47 billion shekels ($392 million) this week.
Despite a strengthening US dollar globally, the Israeli shekel appreciated against major currencies. The dollar fell about 0.8% against the shekel to 3.055, and the euro weakened by 1.5% to 3.429 shekels. The British pound also weakened by 0.9% to 4.044 shekels.
