Foreign Investors Weigh Israeli Election Stakes as JPMorgan Predicts Shekel Shift
Foreign investors closely monitor Israel's elections, with JPMorgan warning of a 3% shekel fluctuation depending on whether the opposition or Benjamin Netanyahu wins.
Israel's upcoming elections are drawing close attention from foreign investors, with some analysts forecasting that an opposition victory could provide a significant boost to the local capital market and the Israeli shekel. According to JPMorgan, election outcomes could trigger a movement of up to 3% in the exchange rate, noting that an opposition win that improves relations with Western allies would strengthen the currency, whereas another government led by Benjamin Netanyahu could weaken it.
"The most significant question is what the impact of the results will be on the region," said Charlie Robertson, chief economic advisor at Equity Bank. He added that a renewed victory for Netanyahu might increase the prospects of further escalation with Iran, while his defeat could be interpreted as a signal of reduced regional tension. US billionaire Bill Ackman, without endorsing a specific candidate, assessed that forming a government without ministers Itamar Ben Gvir and Bezalel Smotrich would signal a fresh start for Israel, potentially helping restore its international standing and expand the Abraham Accords.
On the other hand, not all investors foresee a decline in Israeli assets if Netanyahu remains in power. Sergei Stragachev from German investment firm Union Investment noted that he has been purchasing Israeli bonds ahead of the vote, confident in the resilience of the local economy and companies. Despite recent sharp rallies in the Israeli market, foreign investors remain cautious, with Copley Fund Research data showing that the share of global funds holding Israeli equities is at a historical low following steep declines since 2023.
Broader Economic Impact and Regional Markets
Economists also point to the heavy fiscal burden of the ongoing conflict, which Bank of Israel estimates have pushed past 55 billion dollars. For some international investors, the most compelling opportunities following the vote lie beyond Israel's borders. Jean-Charles Sambor of TT International suggests that an opposition victory or a weakened Netanyahu government could ease regional tensions and benefit Lebanese sovereign bonds, making neighboring markets an indirect barometer for the outcome.
