Tel Aviv shares gain amid waves of missile attacks between Israel and Iran
Major indices rise, led by defense, retail, and construction stocks, as investors weigh implications for the local economy if removal of the Iranian nuclear threat materializes
Sharon Wrobel is a tech reporter for The Times of Israel
Shares on the Tel Aviv Stock Exchange closed in the green on Sunday after erasing earlier losses, despite Israel facing repeated waves of missile attacks from Iran since the Israel Defense Forces began its operation against the Islamic Republic’s nuclear program early Friday morning.
“For years, the Israeli market and economy suffered from the uncertainty about the Iranian threat, the Iranian nuclear program, and if and how a war between Israel and Iran will evolve,” Mizrahi Tefahot Bank chief markets economist Ronen Menachem told The Times of Israel. “The market is now appreciating the fact that some of the extreme negative scenarios it had to consider previously did not come true, which means that there is less uncertainty for investors.”
Yaniv Pagot, VP of Trading at the Tel Aviv Stock Exchange, said that from a “geostrategic perspective, we may be in the midst of a historic moment.”
“If the removal of the Iranian nuclear threat does indeed materialize, this could be a turning point with dramatic implications – both for risk pricing in the Israeli economy, the flow of new investments, and the feasibility of new regional agreements,” Pagot remarked.
The Tel Aviv Stock Exchange’s benchmark TA-125 index rose 0.4% at the close in Tel Aviv. The TA-35 index of blue-chip companies was up 0.5%. The TA-Construction Index jumped 2.2%, and the TA-Retail Index gained 1.3%.
Finance Minister Bezalel Smotrich hailed the stock market reaction as “proof of Israel’s economic resilience even as it is under fire,” calling for further investment in the Israeli economy and stock market.
Pagot described the reaction in the local financial markets as “measured, balanced, and above all, surprisingly restrained.”
“As of this moment, the local market is demonstrating maturity, and investors are making considered decisions,” said Pagot. Though most foreign investors will only return on Monday, “some are definitely already active today as well …all parameters point to resilience, rationality, and continued confidence in the Israeli capital market.
“We must remember that the indices in Tel Aviv have risen by tens of percentage points since the beginning of the year – more than the S&P, for example, and therefore even if we see slight realizations, this is not a sign of concern but rather the opposite: market health,” he noted.
Asked about what savers and investors should do with their investment portfolio, Menachem recommended controlled caution.
“Right now, there is still a lot of volatility, and even though this day ends up with the market rising, it doesn’t say anything about tomorrow, as we don’t know how the war will develop and what each side is preparing for the other side,” said Menachem. “No need to be overconfident even if the first day actually surprised [us].
“We do see in the meantime that people are increasing exposure to retail, defense, and construction stocks,” he added.
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