Israeli Investment Funds Suffer Losses in October Amid Global Market Downturn
Translated & summarized from Walla by baba
Israeli provident funds largely posted losses in October due to global market volatility, with AI company business model doubts and geopolitical tensions impacting energy prices. The More investment house's fund was the sole exception, achieving positive returns. Experts cite uncertainty over AI, potential U.S. rate hikes, and Israeli political instability as key factors influencing market performance. A stable Israeli government is expected to boost the market, while new elections could cause further declines.
The story in 5 lines · by baba
- Nearly all Israeli provident funds reported losses in October due to global market instability.
- The More investment house's provident fund was the only one to achieve positive returns in October.
- Global market volatility was driven by uncertainty surrounding AI companies and geopolitical tensions.
- Israeli stock indices saw significant declines alongside international markets.
- Future market performance in Israel depends on the formation of a stable government.
Israeli investment funds experienced significant losses in October, with nearly all provident funds reporting negative returns. This downturn reflects broader global market instability, driven by growing doubts about the business models of AI companies and uncertainty surrounding potential conflicts involving Iran, which has kept energy prices volatile. Major international stock indices, including the Nasdaq and S&P 500 in the U.S., saw sharp declines of approximately 5.3% and 0.93% respectively. The Israeli stock market also suffered, with the TA-35, TA-90, and TA-125 indices falling by 3.45%, 3.12%, and 3.42% respectively.
Ten of Israel's largest provident funds, when analyzed by Walla Finance, yielded an average negative return of 0.25% in their general track and 1.20% in their stock track during October. However, one fund, managed by the investment house More, achieved positive returns. More's general track saw a 0.4% return, and its stock track yielded 0.45%, making it the top performer for the month. This performance was notably higher than that of Altshuler Shaham's provident fund, which was the lowest performer in the general track, and Harel's fund, the lowest in the stock track.
Eran Kalinski, Deputy CEO of Investments at More Pension and Provident Funds, attributed the market volatility to investor uncertainty regarding AI companies' business models and their return on investment. He also noted the impact on the semiconductor industry, citing Nvidia's investments in AI and the potential implications of a leadership change at the company. Kalinski added that uncertainty surrounding the formation of Israel's next government also contributed to local market fluctuations.
More's fund's success was attributed to its diversified geographical, sectoral, and balanced asset allocation, along with strategic stock and bond selection, particularly within Israel. Despite this, Kalinski mentioned a reduced exposure to Israel prior to the elections due to uncertainty, with the current portfolio balanced at approximately 30% Israel and 70% international. Looking ahead, Kalinski advised considering government and corporate bonds as alternatives to stocks due to their relatively high yields and lower risk. He anticipates continued market volatility due to potential U.S. interest rate hikes, inflation, ongoing geopolitical tensions, and the unresolved AI business model questions. In Israel, the formation of a stable government is expected to boost the market, while a return to elections could lead to further declines.
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