Yaakov Weinstein
Photo: Sivan Farag

'Iran strike to create new market reality'

Yaakov Weinstein, chief investment manager at Migdal Capital Markets, says 'political climate is very non-conducive to foreign investors, and this may lead to the outflow of foreign funds from Israel'

Chief investment manager at Migdal Capital Markets, Yaakov Weinstein, said Monday that the eurozone was the weak link of the current crisis. Speaking at a banks consultant conference held by Migdal Capital markets, he outlined his market forecast for 2012.


"Europe is heading to a recession in 2012 – the European banking system is at risk, and as a result, the banks will slash loans which will stem growth.


"Europe's leaders have come to realize they have to make some changes. In the current state of affairs, the euro zone will not survive. They must establish a body that has the clout to effect fiscal changes.


"The capital market in 2012 will be extremely volatile. We can forget about 'fire-and-forget' investment tactics, technical games are extremely important and the markets correspond accordingly. To buy stock, you'll need a strong jaw to take the punches that the market volatility will deliver."


Weinstein added, "Until now, politicians did what they could to skirt around tough decision making and bought themselves another month or two but they have run out of time and if they do not bring a completely different attitude to the table on Friday's conference, the eurozone is going to find itself in deep water.


"I think that at this stage, the leaders of the zone's strong counties will do practically anything to protect the euro zone, even at the cost of a conflict of interests with their own country. I can't see the eurozone crash because this will bear upon the US and China and they won't let this happen."


'Arab Spring calamitous for Israel'

Weinstein believes that in addition to shockwaves from the global crisis, the two main issues that will come to bear on Israel's economy are Iran and the upheaval in Arab countries.


"With Iran, it is very possible that the war has already begun and no one told us about it. Maybe we'll wake up one morning to the sound of IAF bombers on their way to attack Iran. This kind of operation will create a whole new world. The second thing is the Arab Spring.


"In my opinion, these changes are a calamity for Israel. All that is currently happening in Egypt and the rise of the Muslim Brotherhood is very bad for Israel.


"I think that the real face off in between the Muslim Brotherhood and the Egyptian military is yet to come. On top of that, you have the other Arab countries in the Middle East, which have become more extreme in their views against Israel, and Obama's promise to withdraw from Iraq by 2012, and you have a very non-conducive climate for foreign investors which might lead to outflow of foreign funds from the country."


In regards the bond market, Weinstein said: "Apparently, the bond market cycle is growing short. Once it had a six-seven year life cycle and today it's down to two to three years.


"In 2009, when prices were rock bottom, we knew that investors who buy will eventually profit. Today, bond prices are neither high nor low which creates a problem. Investors who are patient enough to purchase three-year bonds can make nice yields.


"Bank bonds are highly recommended but what I'm talking about are bonds with a higher risk level."


China may affect world markets'

Weinstein went on to address the situation in China which he said might pose a threat in 2012.


"As regards to investments, China is a very interesting place on one hand and a risky place on the other. From China an evil might break forth, which can affect the world's markets.


"Today there is not much testimony on what is going on in China and there is no way to corroborate the figures they publish. However, the main problem is that right now the Chinese issue is marginal – more than anything they care about upholding their regime.


"Until recently, China's relative advantage was its cheap labor but things changed in that respect. Many companies are considering relocating their production activity to other countries that offer cheaper labor than China."


Click here to read this report in Hebrew



פרסום ראשון: 12.07.11, 07:27
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