'The true results undercut stability, which also strengthens the dollar'
צילום: אלי שמעוני
Tel Aviv: Stocks drop after elections
Analysts: market unstable until new coalition appoints foreign minister and presents economic agenda; if new financial policy too socially oriented, foreign investors may take money elsewhere
The Israeli parliamentary elections had a negative result on the Tel Aviv Stock Market Wednesday.
Leading indexes: TA100 drops 2.15 percent; TA25 drops 2.25 percent; Tel-Tech drops 0.6; trade cycle totals NIS 1.24 billion.
"It won’t be easy for Olmert. The next government might be socially-driven, supporting a policy of expanded budget. This may negatively affect foreign investors’ attitude towards Israel,” financial analyst Yuval Ben Zeev said Wednesday morning.
“We did not get the unequivocal stability a sweeping Kadima victory would have provided,” Ben Zeev explained. This fact may be reflected in upcoming days on the screens of the stock market.”
Analysts at the Quatro investment house noted that the recent events did not bode market optimism either. “We are headed for a period of foot-shuffling, maybe even plummeting stocks, until the new government’s financial agenda becomes clear, and until we know who will be appointed finance minister and what his policy will be,” says Shai Zevulun, CEO of Quatro Trust Funds.
Zevulun assessed that in the near future, the market will respond irritably and uncertainly, until the new coalition’s economic agenda is set. Foreign investors are likely to lay low as well, waiting to see where the coalition is headed, in case of an extreme turnaround in the government’s priorities. In such a case, Zevulun said, they may seek alternatives to investing in Israel.
Dollar leaps to NIS 4.7
According to Eran Bason, head economist at the Gift investment house, the rise in the value of the dollar Wednesday was caused by two main factors: the election results and the rise in interest rate on the American dollar Tuesday.
On Tuesday Chairman of the Federal Reserve Ben Bernanke raised the basic interest rate to 4.75 percent in a year. Bason noted that this, in addition to the Israeli election results, strengthened the dollar.
Bason noted that Bernanke “left room” for further interest rate increases in the future, which could continue to strengthen the U.S. dollar.
As for the elections, “Polls predicted that Kadima would fare better. The true results undercut stability, which also strengthens the dollar,” Bason said.
The dollar value rose 0.48 percent and was sold at roughly NIS 4.707. The Euro rose 0.18 percent and was sold at roughly NIS 5.644.
