Foreign investors shift strategy: from massive selling to active buying
Amid financial reports and renewed tensions around the Strait of Hormuz, foreign investors have sharply changed their preferences on the Tel Aviv Stock Exchange. An energy company leads the buying, while banks and the defense sector have returned to the spotlight.
In the capital market, one week can reverse a trend. The ranking of net purchases by foreign investors on the Tel Aviv Stock Exchange this week is full of reversals compared to previous weeks, telling the story of a market that reacts quickly to the reporting season and security-related news.
A brief reminder: "net purchases" represent the difference between what foreign investors bought and sold, serving as an index of their optimism regarding specific stocks.
The stock with the highest net purchases this week, at 56.22 million shekels, is Enlight Renewable Energy. This is unsurprising, as the company reported a particularly strong second quarter with revenues of 210 million dollars (a 55% increase) and a net profit that jumped to 31 million dollars, compared to just 6 million last year. The company also raised its 2026 forecast.
Furthermore, Enlight completed 2.6 billion dollars in financing for the giant CO Bar project in Arizona—the largest in its history—which will include 1.2 gigawatts of solar capacity and 4 gigawatt-hours of storage. Combined with its involvement in server farm construction linked to the AI trend, this creates a growth narrative that is difficult for foreign investors to ignore.
In second place is Bank Hapoalim with 49.58 million shekels, continuing last week's momentum. However, the real surprise is in third place: Bank Leumi, with 39.27 million shekels. This marks a significant turnaround, as Leumi had been topping the foreign sales list for weeks.
This sharp transition from selling to buying illustrates the agility of foreign capital and suggests that investors identify opportunities in banks following a period of pressure, especially after all major banks published their second-quarter reports.
Another notable move is the return of Elbit Systems to the buyers' side, with 35.97 million shekels. After weeks of selling in the defense sector, the tide seems to be turning. The reason is twofold: first, tensions have returned around the Strait of Hormuz, and oil prices have risen, reminding investors that geopolitical risks persist.
Second, Elbit reported a record order backlog of 32 billion dollars, with 73% coming from customers outside Israel, mainly in Europe. Despite the stock falling after the report, foreign investors likely took advantage of the decline to enter at a lower price. Teva rounds out the top five with 33.05 million shekels, continuing the pharmaceutical giant's gradual recovery.
The overall picture shows a rotation: renewable energy with an AI story, banks returning to favor, and the defense sector reawakening in the shadow of the Strait of Hormuz. It is worth remembering that a key macro factor is at play: the Bank of Israel is in the middle of an interest rate reduction cycle, from 4% at the start of the year to 3.5% in July, which directly affects bank valuations.
It is important to note that foreign purchases are an indicator, not a guarantee, and trends can reverse quickly. However, if you hold a pension fund or training fund, these stocks are likely already in your portfolio, and the movements of foreign capital directly affect their value.
