Foreign Investors Pour 894 Million Shekels Into Israeli Stocks Post-Election
Foreign investors poured 894 million shekels into Israeli stocks post-election, favoring financial sectors despite rising risk premiums and differing domestic strategies.
Despite political uncertainty, declining stock market indices, and a weakening shekel, foreign investors continue to pour capital into the Israeli stock market. According to data published by Nissan Avraham, an economist in the research unit of the Tel Aviv Stock Exchange, foreign investors have purchased a net total of approximately 894 million shekels in shares since the elections.
The data covers the period from October 28, the first trading day following the elections, through November 4. Out of the total foreign purchases, approximately 630 million shekels were directed toward the financial sector, which is heavily influenced by domestic economic developments. Insurance stocks led the way with net purchases of 276 million shekels, followed by banks at 248 million shekels and financial services at 106 million shekels.
Diverging Strategies of Local Institutional Bodies
In contrast, local institutional entities recorded net purchases of only about 100 million shekels, though this figure conceals a significant shift in investment composition. Institutions sold bank shares worth approximately 137 million shekels, insurance stocks totaling 111 million shekels, and financial services shares worth 38 million shekels.
Concurrently, they acquired technology shares totaling a net volume of roughly 380 million shekels, alongside investments of approximately 106 million shekels in the real estate and construction sector. Mutual funds acted differently as well, selling a net total of about 470 million shekels in shares during the examined period.
Risk Premium Rises While Foreigners Remain Undeterred
The behavior of foreign investors is particularly striking against the backdrop of developments in Israel's risk premium. According to Avraham, in the two months preceding the elections, the five-year dollar CDS spread widened by approximately six basis points and remained at a similar level following the election results.
Nevertheless, during the first week following the elections, foreign investors did not reduce their exposure to Israeli equities. Instead, they engaged in substantial purchasing activity, primarily targeting sectors sensitive to domestic economic activity, highlighting starkly contrasting strategies among market participants.
