Record results reported, yet foreigners sold: the hot sector that is starting to cool down

In the capital market, sometimes the direction of the money tells a story opposite to the headlines. This week, two semiconductor stocks that were among the biggest stars on the Tel Aviv Stock Exchange and published excellent results, led the net sales ranking of foreign investors.

Reminder: "net sales" are not an escape from the stock, but the difference between what foreigners sold and what they bought. When more of them reduce a position than increase it, net sales are created, an indicator of the direction in which foreign money is leaning.

At the top of the sales is Tower Semiconductor with 59.8 million shekels, the second consecutive week it has been at the top of the sales. Alongside it, in third place, is Nova with 40.76 million shekels. The paradox is striking: Tower reported record results in the second quarter, and Nova recorded revenue of about 225 million dollars. So why sell?

The answer comes from overseas. Semiconductor stocks on Wall Street suffered a sharp realization, as the American semiconductor index lost almost 8% in a single week, and even an excellent report from Nvidia did not prevent a decline of about 5% in the stock. After a huge rally based on the artificial intelligence wave, the market is starting to fear that semiconductor stock prices are too high. The foreigners, who hold Tower and Nova, are simply locking in profits before the momentum reverses. This is not a negative signal about the companies themselves, but about the valuation that has become stretched.

Beyond semiconductors, two other movements are notable. The shares of the Tel Aviv Stock Exchange itself suffered net sales of 41.41 million shekels. The insurance company Clal was sold for 37.37 million shekels, a continuation of the selling pressure that foreigners have been exerting on the insurance sector for weeks.

Insurance companies are particularly sensitive to the capital market, as a significant portion of their profits comes from the investment returns they manage, and therefore they often behave like an option on the market. Nayax, the fintech and payments company, closes the top five with 35.7 million shekels.

Data from foreign investors shows that they are exiting expensive semiconductors and insurance, and entering banks and Teva. This is not a vote of no confidence in the Israeli economy, but risk management: a shift from expensive "growth" stocks, which are sensitive to global sentiment, to stable "value" stocks that pay dividends.

The lesson for the Israeli saver is important: stocks like Tower and Nova are in the pension funds, provident funds, and advanced study funds of most of us, and such fluctuations affect their value. And when a stock has surged strongly on a global trend wave, even a record report is not always enough, because what determines it is not only how good the report is, but how much has already been priced into the price.