Economic aftershocks of Israel's political earthquake

  • السبت 11 مارس 2023 02:34 م

Economic aftershocks of Israel's political earthquake


Translate: Nashwa Abu Amer

Since the beginning of the year, coinciding with the formation of the right-wing government, and the start of protests over its judicial coup, the Tel Aviv Stock Exchange and Shekel have shown weak returns. At the same time, Israelis respond to the sale of mutual investment funds that invest in assets and foreign exchange.


Transfers occur predominantly in liquid funds, and less in retirement savings, prompting economic circles to confirm that they are experiencing a horizontal exit from investment facilities, indeed, they are still a minority, but they may increase over time.


After high-tech entrepreneurs, bankers, economists, and senior managers topped Israeli discourse warning of the consequences of the legal coup, the Israeli public saw signs of weakness in the domestic market, evidence that leading indices on the Tel Aviv Stock Exchange trailed 10-15% after U.S. and European exchanges, and Shekels fell against foreign currency.


The Israeli currency still has a long way to reach the bottom, but one economist saw, pessimistic, that the dollar could be worth ten shekels at the end of the road, although this estimate seems urgent, the Israelis, in general, are not waiting for this nightmare, what motivated them to try to protect themselves in liquid savings such as investment portfolios and mutual funds, and to a much lesser extent in long-term savings such as savings, training and retirement funds.


As a result, there have been significant moves to shift investments from the local market outward, or foreign currency, transfers can now be seen in liquid funds in current accounts, investment funds, and portfolios, it is simply possible to enter into a securities trading application in a bank or private investment houses and to Sell a mutual investment fund that invests in the Tel Aviv Stock Exchange and buy instead of it an investment abroad or in foreign currencies.


There are many risks in Israeli markets, and it is clear that they enter not a short period of problems in all companies, most of the noise in residential and leveraged real estate companies, because of all the financial conditions against them, in light of the high-interest rate, although the legal changes of the government are dramatic, and affect the exchange rate first.


As a direct result of the deterioration of the political situation in the occupation, the stock exchange has fallen more than the rest of the world, and Israel's fear of rising weakness for the Shekel is the same as that of the world's currencies, although its weakness will, judgmentally, exacerbate inflationary pressures. As a result, the interest rate rises, the stock market becomes more volatile, it will suffer a fatal blow, the situation will be much worse, and more investors will lose.


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