The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Israel: Exposed, illiquid, lacking in depth

Government dominance of Israel's capital markets leaves state funding heavily exposed to outflows like the recent mass redemption of savings in provident funds. It has also hampered the development of corporate bonds. Funding locally through the stock exchange is problematic since concentration of ownership has rendered equities illiquid. Charles Piggott reports on proposals to reform the system

Israel's local markets are going through a rough period. During the past four months the Bank of Israel has had to intervene repeatedly in the market to support the price of government bonds. Research published by Bank Hapoalim on August 1 compared the central bank's action to US Federal Reserve Bank intervention to preserve the financial system's liquidity in the 1987 crash. Central bank interventions, under the government's safety-net action, have already exceeded IS1 billion ($305.8 million).

The stock market has also had a difficult ride. Since the beginning of this year the Mishtanin index of the 100 most liquid shares traded on the Tel Aviv Stock Exchange has fallen by 14.5%. Some Israeli investment funds have fallen by over 35%.

But jitters over Binyamin Netanyahu's recently formed coalition government and worries over a stalling Middle East peace process are not the only cause of the market's retreat. And, although the Tel Aviv Stock Exchange has been a popular destination for emerging market funds since Morgan Stanley included Israel in its index of emerging markets in March 1995, neither is it a foreign investor withdrawal that is bringing the market down.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree