The Marker: Accelerating Decline in the Israeli Market Amid Government Denial

SadaNews - The Israeli newspaper The Marker stated that the Israeli stock exchange lost about 7% of its value in just two weeks, while Finance Minister Bezalel Smotrich continued to present a "misleading" rosy picture of the economic performance, ignoring the deterioration of key indicators and the widening gap with global markets.

According to the newspaper, "the minister is not satisfied with distorting the numbers, but also attacks the economic media and operates from a purely political standpoint, even at the expense of the truth."

Despite the Finance Ministry celebrating a rise in Tel Aviv indices by 30% to 34% between January and July, compared to 25% for the German DAX index and 15% for the Euro Stoxx 600, and 10% to 12% for the American S&P 500 and Nasdaq, the report clarified that these figures depend on a carefully chosen time period to conceal the actual decline, as the Israeli market has dropped about 6% since July 23, while American indices have risen.

The Dollar Rises and Political Risks Escalate

The Marker noted that the increase in the dollar exchange rate by 4% recently has increased returns for foreign investors compared to locals, revealing the weakness of the Israeli market's attractiveness.

The newspaper attributed this to "reckless government decisions," the most notable of which is the extension of the war without clear security objectives, which military officials also confirmed, amidst the deterioration of the international environment surrounding Israel, constituting a real economic threat.

The report also considered the political maneuvers to isolate the legal advisor and the continued privileges granted to hard-line religious groups, along with conflicts with the media, as concerning signs for investors, showing a government "acting against national interest."

Past Gains Were a Temporary Exception

According to The Marker, a significant portion of the previous rise in the market was due to exceptional circumstances, such as the declared victories over Hezbollah and Iran and the weakening of Hamas in Gaza, along with the freezing of the judicial coup project due to the war.

However, these factors did not last long, as sentiment changed with the realization that interest rate cuts or an end to the war in Gaza are not on the horizon, leading to a drop in shares of vital sectors like real estate.

The report recalled that the stock exchange suffered from weak performance in 2022 and 2023, and did not start to recover until after the summer of 2024, when it exceeded its low levels, which means that recent gains were, in part, just compensating for previous losses.

Investment Withdrawals Increase Pressure

Among the developments described by the newspaper as "serious," was the announcement of the "Norwegian Sovereign Wealth Fund" selling its investments in Israeli companies, pledging to continue its disinvestment, which The Marker considered as "adding fuel to the fire" at a time when the market is suffering from rising local and external pressures.

Ultimately, The Marker concluded that the current behavior of the Israeli government, which prioritizes narrow political calculations, exacerbates Israel's economic isolation and exposes its financial market to sharp fluctuations.

The newspaper confirmed that "the gap with global markets will not close unless policies change radically and the government stops ignoring the ground and economic realities."