Phoenix Holdings Urges Calm as Tel Aviv Stocks Fall Following Elections

Phoenix Holdings warns that sharp declines on the Tel Aviv Stock Exchange reflect political uncertainty following the Knesset elections, advising investors not to rush into portfolio changes. CEO Avner Haddad noted a sudden shift within less than a day, as the shekel initially strengthened before the dollar rebounded to around 3.125 shekels and equity indices dropped 3% to 5%.

"There is no panic, no hysteria," Haddad stated, explaining that the current decline represents about half of the gains accumulated over the preceding weeks in anticipation of the vote. He outlined two potential scenarios: a negative outcome maintaining the pre-election political deadlock, and a positive scenario involving the formation of a unity government to tackle fiscal deficits, the budget, education, and economic structural issues.

Chief Economist Rinat Ashkenazi emphasized that while the Israeli economy has weathered recent challenges, long-neglected structural reforms are now imperative. She pointed to workforce integration, technological innovation, and returning the debt-to-GDP ratio to 60% as critical priorities regardless of the incoming administration.

Addressing global factors, Ashkenazi noted that US midterm elections carry less weight for markets than artificial intelligence funding burdens and upcoming US Federal Reserve interest rate trajectories. Persistent inflation risks and energy price volatility remain key determinants shaping the broader debt market outlook.