Tel Aviv Stock Exchange up despite Iran-Israel conflict escalation
Israeli Stocks Rally Amidst Conflict: Defence and Construction Lead the Charge.
Markets weigh risks against potential stability if the Iranian nuclear threat diminishes.
Shares on the Tel Aviv Stock Exchange (TASE) closed positively on Sunday, reversing earlier declines despite ongoing missile attacks amid the escalating conflict between Israel and Iran. Investors appeared cautiously optimistic, encouraged by potential long-term economic benefits if the current Israeli military operation significantly reduces or eliminates the Iranian nuclear threat.
“For years, uncertainty surrounding Iran’s nuclear ambitions has weighed heavily on Israel’s economy and financial markets,” explained Ronen Menachem, Chief Markets Economist at Mizrahi Tefahot Bank, in comments to The Times of Israel. “Investors are now reassessing these risks, acknowledging that some of the worst-case scenarios have so far not materialised, thus reducing overall market uncertainty.”
Yaniv Pagot, Vice President of Trading at TASE, highlighted the significance of current developments from a geostrategic standpoint. “We might be witnessing a historic turning point...Should the threat of a nuclear Iran genuinely diminish, it could fundamentally alter risk assessments, attract significant foreign investment, and pave the way for new regional agreements.”
At market close, the benchmark TA-125 index was up 0.4%, while the blue-chip TA-35 index gained 0.5%. Construction stocks surged strongly, with the TA-Construction Index climbing by 2.2%, and retail also performed notably, rising 1.3%.
Finance Minister Bezalel Smotrich praised the resilience reflected in the market’s response, describing it as clear evidence of Israel's robust economic fundamentals despite current security challenges. He called for ongoing investment and confidence in the Israeli economy.
Reflecting on the broader market performance, Pagot added, “Tel Aviv indices have significantly outperformed global markets this year, indicating overall market strength rather than vulnerability.”
Menachem advised investors to remain cautiously optimistic. “Volatility is still high. A positive market today does not necessarily predict tomorrow’s outcomes due to ongoing developments in the conflict,” he cautioned, recommending prudent portfolio management. “Currently, there is noticeable investor interest in retail, defence, and construction sectors, suggesting selective optimism.”
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