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Israel Faces Political Deadlock – So Why Are the Markets So Strong?

16 3 0
13.08.2019

A funny thing happened on the way to Election Day. By every reckoning, the vote is going to end in a stalemate, with neither the right nor the left being able to assemble a Knesset majority. The end of the Netanyahu era is at hand – and no one has any idea what is going to come next.

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At best, we’re looking at protracted coalition talks and no effective government for much of the rest of the year. At worst, well, who knows?

All this should add up to enough political uncertainty to send a country’s markets into a tizzy. That hasn't happened.

The Tel Aviv Stock Exchange’s benchmark TA-35 index fell after Knesset voted to dissolve itself in May, but since then it has risen more than 5%. Bond prices have climbed, and last week Standard & Poor’s affirmed Israel’s AA- credit rating with a Stable outlook.

Perhaps the most counterintuitive thing of all is that the shekel climbed to its highest level in two years against the dollar and other major currencies. Foreign investors and Israel’s rich aren’t bailing out - they’re bailing in.

Compare that with Italy, where bond prices skidded last week after League leader Matteo Salvini said his coalition with the 5-Star Movement was untenable and called for........

© Haaretz