Israeli Election Results Trigger Market Plunge and Currency Weakness

Following the final results of the recent elections, the Tel Aviv Stock Exchange experienced sharp declines, with the TA 90 index dropping 4.6%, the TA 125 falling 2.4%, and the TA 35 decreasing by 1.8%. Real estate, insurance, and banking stocks were particularly hard hit, with the construction index losing 8.7%, the real estate index down 6.3%, and insurance and bank indices falling around 5%. Concurrently, the Israeli Shekel weakened significantly against major currencies. The dollar rose to approximately 3.13 shekels from around 3.02 shekels on election day, and the euro climbed to about 3.47 shekels. Market analysts anticipate continued volatility tied to political developments, with the dollar's strength potentially impacting importers and fuel prices. Experts, however, advise those seeking mortgages not to infer immediate interest rate changes from currency fluctuations.

In a separate development, over 100 senior economists, business figures, and former public officials, including Nobel laureate Professor Yoel Mokyr and former Bank of Israel Governor Professor Jacob Frankel, penned a strong letter opposing Prime Minister Benjamin Netanyahu's suggestion to utilize cryptocurrencies in case of sanctions on the Israeli banking system. The signatories warned that banking sanctions could disrupt nearly all of Israel's international economic activities, including credit card usage, online purchases from platforms like Amazon and AliExpress, foreign investments, exports, and money transfers. They argued that crypto cannot replace a functioning international banking system and advocated for preventing sanctions rather than preparing to circumvent them. The Bank of Israel also expressed criticism, while Netanyahu clarified that crypto is merely one option under consideration.

Separately, the Tel Aviv Administrative Court overturned municipal permits allowing tables and chairs to be placed on roads and sidewalks at night in a section of Nachalat Binyamin street. Judge Limor Bibi ruled that these permits had effectively transformed a "road" area into a public gathering space without proper planning, transparency, or public consultation. The decision does not end nightlife in the area, as vehicle restrictions and nighttime business operating permits remain in effect. The existing permits will expire within six months. The ruling may encourage similar legal challenges in other entertainment districts.

In international news, Slovakia is facing a deep demographic crisis. Births are projected to hit a historic low of just over 42,000 in 2025, while the population aged 65 and above has reached 1.03 million, representing 19% of the total. Projections indicate that by 2050, the elderly proportion could rise to 30%, with annual births continuing to decline. This demographic shift is already impacting the economy, with the country planning to spend 13.7 billion euros on pensions by 2027. The aging population is expected to further strain the budget, exacerbated by a severe housing crisis for the young, where the average annual salary in Bratislava only buys 6.8 square meters of housing. Nearly a quarter of pensioners continue to work or seek supplementary income, fueling the crisis alongside rising housing costs and delayed family formation.

Finally, three Israeli-American brothers, Tal, Oren, and Alon Alexander, were sentenced to 30 years in prison each in Manhattan for sex trafficking and other sexual offenses. The brothers, sons of Israeli immigrants who became wealthy real estate developers in the U.S., were convicted after 11 women testified against them. Prosecutors alleged that for over two decades, they exploited their wealth and status to lure women to parties and vacations where some were drugged, raped, and assaulted. The prosecution identified at least 70 victims. During the sentencing, survivors described the attacks and their lasting harm, while the brothers maintained their innocence. The case led to their downfall from the elite U.S. real estate world.