Tel Aviv Stock Exchange Shows Surprising Post-Election Volatility and Gains
Translated & summarized from Maariv by baba
The Tel Aviv Stock Exchange experienced a surprising post-election trend, with stock market volatility increasing by up to 45% in the three weeks following elections. Despite initial losses, the TA-35 and TA-125 indices ultimately gained an average of 1.7% a month after the vote. The exchange attributes this to shifting investor uncertainty regarding government formation and economic policy. The findings are based on an average of ten election cycles and do not exclude other market influences.
The story in 5 lines · by baba
- Tel Aviv Stock Exchange saw up to 45% increased volatility in the three weeks after elections.
- Stock indices TA-35 and TA-125 gained an average of 1.7% a month after elections.
- Initial post-election week saw average losses of nearly 1% for major stock indices.
- TASE suggests uncertainty shifts from election results to government formation and policy.
- Analysis covers an average of ten election cycles, not every individual election.
The Tel Aviv Stock Exchange (TASE) has revealed that in the three weeks following elections, stock market volatility increased by up to 45%. Despite initial declines in the first week after voting, the main indices, TA-35 and TA-125, recorded an average gain of approximately 1.7% by the end of the month. On the first trading day after elections, the TA-35 index rose by an average of 0.58% and the TA-125 by 0.52%. However, by the end of the first week, the cumulative average return stood at -0.89% for the TA-35 and -0.67% for the TA-125.
Examining the entire month presents a different picture. A month after the elections, the TA-35 index climbed an average of 1.72%, and the TA-125 saw a 1.67% increase. This suggests that, historically, initial post-election dips did not necessarily predict the market's direction for the remainder of the month.
The TASE analysis also highlights a significant rise in volatility, reflecting the magnitude of index changes rather than their direction. In the initial three weeks post-election, volatility was 31% to 45% higher than in a typical week, only beginning to moderate later in the month. The exchange suggests this is due to uncertainty shifting from election outcomes to the formation of a government, its ability to pass a budget, and its economic policies. Even with prolonged coalition negotiations, investors may develop a clearer outlook during this period.
It is important to note that this analysis is based on an average of ten election cycles and does not guarantee similar results in every instance. The study describes index behavior around elections but does not definitively prove that elections alone caused these changes, as other economic, security, or global market developments could also have influenced performance.
