Investment Chief Sees Opportunity in Stocks Down Nearly 40% Amid Israeli Market Optimism
Eyal Shina, a 48-year-old investment executive with 20 years of experience, recently joined Pasternak Shoham as Chief Investment Officer. Shina began his career in 2006 at Profound Investment House and later held senior roles at Migdal Capital Markets, Epsilon Investments, and Phoenix's KSM after its acquisition of Epsilon. Pasternak Shoham plans to pursue a 300 million shekel IPO on the Tel Aviv Stock Exchange, leveraging recent market gains.
Despite the recent stagnation in markets following sharp rises over the past two years, Shina remains optimistic about Israel's economic prospects. He highlights Israel's unique demographic advantages, including a high birth rate and the potential for greater workforce integration of the Haredi and Arab sectors, combined with Israeli innovation and a strong startup ecosystem, as drivers for sustained growth.
Regarding global markets, Shina warns that rising US interest rates and bond yields, currently near 4.7% for 10-year Treasury bonds, could weigh on equities due to higher financing costs and economic slowdown risks. However, he sees an opportunity in US bonds if currency exposure is hedged, offering attractive yields not seen in years.
Shina advises investment portfolios to maximize exposure in Israeli shekels, given that clients' expenses are in local currency. For conservative investors, he recommends a 35% allocation to equities (20% Israeli, 15% international, mainly US) and 65% to bonds, including Israeli corporate and government bonds and hedged US government bonds. Aggressive investors might hold 70% equities and 30% bonds.
He identifies Israeli banking stocks as a core sector due to their strong returns, regulatory protection, and efficiency gains from AI. The telecommunications sector also presents opportunities, with low prices and rising internet dependency likely to drive price increases. In the defense sector, recent 40% declines in stock prices create attractive entry points amid rising global and Israeli defense budgets.
Shina favors technology exposure through US ETFs like MAGS and industrial stocks via XLI, noting AI's transformative potential in traditional industries. Conversely, he recommends underweighting insurance stocks due to high valuations and caution in commercial real estate, especially office spaces outside Tel Aviv, due to oversupply and occupancy challenges.