Foreign Investors Buy Israeli Stocks Despite October Market Drop
Translated & summarized from Calcalist by baba
Foreign investors bought a net of 920 million shekels in Israeli stocks during October, despite market declines and political uncertainty. This marks a recovery from earlier in the year, when foreign investment had significantly decreased. The bond market experienced volatility, with yields rising, while corporate debt issuance and mutual fund inflows remained strong. The Tel Aviv Stock Exchange saw overall market declines in October.
The story in 7 lines · by baba
- Foreign investors purchased 920 million shekels net in Israeli stocks during October.
- Local institutional investors bought 1.13 billion shekels net in stocks in October.
- Israeli corporations were net sellers of stocks, selling 3.55 billion shekels.
- Foreign investment in Israeli stocks had dropped nearly 70% in the first nine months of 2026.
- Government bond yields rose in October, contrasting with a slight decrease in U.S. bond yields.
- Companies raised 14.1 billion shekels in corporate bonds in October.
- Mutual funds saw net inflows of 7.8 billion shekels in October.
Despite a downturn in the Tel Aviv Stock Exchange during October and ongoing political uncertainty, foreign investors significantly increased their holdings in local stocks, purchasing a net of 920 million shekels. Approximately half of this amount, 439 million shekels, was invested in the three trading days following the elections, with about 235 million shekels directed towards bank stocks. Local investor groups also showed increased activity, with pension funds, provident funds, and insurance companies buying 1.13 billion shekels in net stocks, and portfolio managers and their clients acquiring 682 million shekels net. Notable institutional purchases included shares in Elbit Systems, Tower, Next Vision, and Nova. In contrast, Israeli corporations sold stocks totaling a net of 3.55 billion shekels.
This surge in foreign investment marks a recovery after a period of reduced activity. In the first nine months of 2026, foreign residents bought only 2.7 billion shekels net in Tel Aviv stocks, a nearly 70% drop from the 8.9 billion shekels in the same period last year. September saw net foreign purchases of just 70 million shekels.
The political uncertainty also impacted the government bond market, particularly long-term bonds. The Tel-Gov-15+ index fell 2% in October, and the Tel-Gov-10+ index weakened by 1.8%. The yield on 10-year Israeli government bonds rose from 4.031% to 4.156% during the month, with most of the increase occurring after the election results were published. This contrasts with the U.S., where 10-year government bond yields decreased slightly.
Despite market volatility, corporate debt issuance remained active, with 14.1 billion shekels raised in the corporate bond market in October. Financial instrument companies and banks accounted for about three-quarters of this amount, raising 5.63 billion shekels and 5 billion shekels respectively. Major issuances included Bank Leumi's 4 billion shekel raise and Discount Bank's 1 billion shekel raise. Aviad Deposits also entered the public bond market, raising 1.1 billion shekels. Additionally, Bank Leumi and Discount Bank jointly raised 1.8 billion shekels through commercial paper.
The mutual fund industry also continued its growth, with net inflows of 7.8 billion shekels in October, bringing year-to-date inflows to 61.4 billion shekels. Total assets under management in active and passive funds reached 853.8 billion shekels by the end of the month, a 13.5% increase since the start of the year. Passive funds led inflows with 5.2 billion shekels net, including 4.7 billion shekels in ETFs, while active funds raised 2.6 billion shekels net, with money market funds showing significant inflows of 3.9 billion shekels.
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