Israeli Analysts Urge Calm Amidst Market Drop Post-Election
Translated & summarized from Globes by baba
The Tel Aviv Stock Exchange saw significant drops on Wednesday following election results, with the TA-35 index down 3% and the dollar rising. Analysts, however, are urging calm, pointing to Israel's strong macroeconomic indicators, including projected 7% growth by 2027, low inflation, and a low deficit, as reasons for long-term market stability. They advise investors to avoid panic selling and focus on economic fundamentals, noting that past market volatility has made investors more resilient. Short-term fluctuations are expected, but long-term trends and global events are seen as more influential.
The story in 5 lines · by baba
- Israeli stock market and shekel showed strength over the past four years due to positive economic data.
- Analysts advise against panic selling despite market drops following election results.
- Israel's projected 7% growth by 2027, low inflation, and low deficit support the market.
- Market volatility is attributed to uncertainty and potential political deadlock, not panic.
- Diversified portfolios and long-term economic trends are key for investors.
Following the Israeli election results, the Tel Aviv Stock Exchange experienced sharp declines on Wednesday morning, with the TA-35 index falling by approximately 3% and the construction index plummeting by 8%. The dollar also rose by 0.7% to 3.1 shekels. Despite the market volatility, analysts are advising investors against panic, emphasizing the importance of focusing on Israel's medium to long-term macroeconomic data.
Gil Dotan, Senior Vice President of Premium Clients at IBI Investment House, highlighted Israel's projected 7% growth in 2027, low interest rates, and minimal deficit as factors supporting the market. He stated that while it might not be the optimal time to buy, it is certainly not the time to sell. Dotan noted that past experiences with market fluctuations, such as geopolitical events and the pandemic, have made investors more resilient and focused on economic fundamentals rather than short-term external factors. He also pointed out that diversified investment portfolios, including international assets, mitigate risk and volatility.
Dotan further commented that Israel has benefited from global security turmoil, becoming a major defense exporter and experiencing numerous high-value exits, which bolsters the state's revenue and maintains a low debt-to-GDP ratio. He believes that even with potential government changes, the stock market and the shekel have shown strength over the past four years due to positive economic data.
Lior Vider, owner of the "Maf'il Ro'ach" information service, attributed the market's reaction to uncertainty and the potential for political deadlock, which can lead to delays in significant economic decisions. He advised private investors to detach emotions, avoid rash decisions driven by panic, and refrain from market timing based on political headlines, suggesting that past dramatic political events were often priced in once reality became clearer.
Rami Dror, CEO of Value B'Rua'a, noted that the market had anticipated a change, but the current political stalemate, leaning towards a unity government or repeat elections, has disappointed expectations. He characterized the current market movement as a correction rather than panic, driven by short-term factors. Dror emphasized that long-term market trends, global developments, AI, and the conflict with Iran will be more decisive. He also mentioned that the upcoming US midterm elections on November 3rd are more significant for the markets, potentially followed by an attack on Iran, which might strengthen the dollar in the short term.
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