Two Months of Gains: Has the Tough Period for S&P 500 Investors Ended?
Provident and pension fund investors saw another negative month, with the exception of the S&P 500 track. While Tel Aviv outperformed Wall Street in July, calculation timing and the surging dollar shifted the results. Also: insights from a dramatic earnings season for tech giants.
The July returns for provident and pension funds barely capture the market drama of the past month. Expectations of war with Iran triggered sharp volatility in Tel Aviv and on Wall Street, while chip stocks suffered their worst month since 2008, causing a collapse on the South Korean stock exchange.
Earnings reports from tech giants displayed extreme volatility, with major companies gaining or losing hundreds of billions of dollars in single sessions, while the dollar strengthened by approximately 9% against the shekel in less than two months.
Amid this turbulence, most savings tracks ended the month with negative results. According to Avi Barakowitz, deputy chief investment manager at Mitav Gemel ve-Pensia, general tracks are expected to decline by about 0.5% (range of -0.2% to -0.8%), with equity tracks down by 0.9% (range of -0.5% to -1.3%).
1. S&P 500 investors can thank the dollar
The only positive performer in July was the S&P 500 track, which recorded a 2.4% gain. This was driven not by the index itself, which fell, but by "natural hedging" for Israeli investors. The shekel’s 3% depreciation against the dollar (to 3.05 shekels per dollar) offset overseas declines and boosted returns.
Eidan Azulai, chief investment manager at Sigma-Clarity, states: "The American market is the only one in the world, besides Israel, worth investing in for the long term. No other market can compete with the US in terms of innovation and creativity."
2. The last day that could have saved the month
July did not end with significant declines (except for the Nasdaq 100, which fell 6.6%). The S&P 500 ended down just 0.1%, while the TA 125 rose 1.5%. These gains, driven by a strong Friday, were not captured in most fund reports, which closed on Thursday. These will instead reflect in August returns.
3. Behind the volatility: the Korean barometer
Daniel Leitenr, CEO of Tammir Fishman mutual funds, highlights the increasing correlation between South Korea and the US, particularly in the chip sector. The SOXX chip index fell 22% in July, while the South Korean KOSPI saw daily swings of up to 18%.
4. Tech giant drama: "attractive valuation"
Despite the volatility, experts remain bullish on tech. Ayel Shina of Pasternak They suggests that falling chip and memory prices will ultimately strengthen large tech stocks. Leitenr adds: "The valuation of tech giants is attractive, and growth potential is high. We continue to hold large, stable US companies."
5. What’s next for Israel? "Not much until the elections"
Regarding the local market, experts agree that little will change until the elections. "Investors are in wait-and-see mode, looking for election results and the structure of the new government," concludes Azulai.
