Investors Call for Government Action to Restore Stability to Tel Aviv Stock Exchange

Trading on the Tel Aviv Stock Exchange has been heavily impacted by investor uncertainty and fear over the country’s planned judicial overhaul. The exchange’s chief executive, Ittai Ben-Zeev, warned that as a result of the proposed reforms and global economic trends, the exchange’s leading indices have underperformed compared to global counterparts. He called on the government to take action to restore trust and stability to the local capital market.

Ben-Zeev’s concerns are supported by warnings from international bodies and credit-rating agencies. There are fears that Israel’s economic strength could be damaged, leading to a downgrade of the country’s economy and a financial crisis. The uncertainty surrounding the proposed changes to the judicial system has already resulted in a drop in the value of the shekel and a decrease in local investments.

The TASE’s financial report warns of further devaluation of the shekel, damages to exports, inflationary pressures, and interest rate increases if the controversy continues. The report also suggests that there may be a decrease in local investments due to reluctance from foreign investors and a diversion of investments of local investors abroad. This could lead to a lowering of the credit rating of the State of Israel or an increase in the country’s risk premium.

The government’s plans to weaken the judiciary have already caused capital outflows and a shift in investments towards overseas securities and debt. Investors have been pulling money from mutual funds that invest in local stocks and bonds, while funds that track international markets have seen an inflow of capital. There has also been significant growth in the trading volumes of government bonds.

To restore stability and confidence to the Tel Aviv Stock Exchange, it is crucial for the government to address the concerns raised by investors and international bodies. Taking action to address the uncertainty surrounding the proposed judicial reforms and listening to the warnings of credit-rating agencies and economists will be vital in maintaining Israel’s economic strength and attracting investments from across the globe.

Analyst comment

This news can be considered negative as it highlights investor uncertainty and fear surrounding the planned judicial overhaul in Israel. The market is likely to face further devaluation of the shekel, damages to exports, inflationary pressures, and interest rate increases if the controversy continues. There may be a decrease in local investments and a diversion of investments abroad, potentially leading to a lowering of the credit rating of the State of Israel or an increase in the country’s risk premium. The government needs to address investor concerns and take action to restore stability and confidence in the Tel Aviv Stock Exchange.