TASE Study Reveals Market Trends and Volatility Following Israeli Elections
A TASE study of past Israeli elections reveals that initial post-election market gains typically give way to a brief weekly dip before rebounding with a 1.7% average return after one month.
A recent study by the Tel Aviv Stock Exchange (TASE) research unit examining the past ten election cycles reveals a recurring pattern in market behavior. On the first trading day following elections, the TA-35 index records an average increase of 0.58%, while the TA-125 index gains 0.52%. However, this initial optimism quickly gives way to a downward trend, resulting in a negative cumulative return of 0.89% for the TA-35 and 0.67% for the TA-125 by the end of the first week.
Market Volatility and Long-Term Recovery
Despite the short-term dip, the market rebounds within a month. The TA-35 posts an average cumulative positive return of 1.72%, and the TA-125 rises by 1.67%. Researchers emphasize that first-week declines do not indicate a prolonged negative trend. Furthermore, volatility in leading stock indices surges by up to 45% during the first three weeks post-election compared to a typical trading week, before gradually subsiding.
Investor Guidance Amid Political Uncertainty
Analysts attribute the post-election volatility to shifting market concerns regarding coalition formation and the approval of the state budget. TASE experts advise long-term investors to look past short-term noise and avoid market timing. The analysis notes that fundamental macroeconomic factors—such as robust GDP growth forecasts, a tight labor market, and relatively low inflation—remain the primary drivers of long-term equity performance in Israel.
