PNN – The Tel Aviv Stock Exchange has suffered a regressive fall after the defeat by Iran became certain.
According to the report of Pakistan News Network; Ziman Israel wrote in a report on this matter: The Tel Aviv Stock Exchange, which was once a hotbed of huge profits has recently witnessed a sharp decline and has shown its weakest performance this month.
According to this Hebrew-language media outlet, the stock market’s decline has led many investors to conclude that previous gains were all fake.
This is while, according to this media outlet, the defeat against Iran is also considered one of the reasons for this decline.
The report states: By the end of the [12-day war], the narrative that Israeli leaders were promoting to the public and the markets was almost optimistic: the Iranian threat had been eliminated for generations, Hamas was no more, and even Hezbollah had been so deterred that it remained silent throughout the campaign and offered no assistance to its allies.
The prevailing feeling was that Israel had reshaped the Middle East and that the main security threat had been eliminated. The Tel Aviv Stock Exchange responded to this sentiment, outperforming other stock markets around the world, rising nearly 50 percent in just one year.
Investors rushed to buy almost every stock in the local market, from real estate companies to insurance companies, which rose by tens of percent. The sense of imminent risk in Israel seemed to have virtually disappeared.
The risk premium is the compensation an investor expects for the risk he takes. When an existential threat becomes a distant memory, the required compensation decreases, the value of companies increases, and the local market becomes a magnet for capital. In those days, Tel Aviv was considered the safest and most promising place in the Western world.
But reality, as is customary in our region, refused to show victory. Then came disappointment.
Reverse image: The 40-Day War
The “40-Day War” ended in a bitter strategic defeat for Israel at this point. When the dust settled, investors realized that the Iran that had been shielded from danger for generations had given way to an Iranian that had forced the United States to make dubious deals with the country at the cost of losing Israel.
Hezbollah was back in action, while Iran (as its ally) was protecting it well.
Suddenly, it was clear to everyone that Benjamin Netanyahu’s dream of turning Israel into a Sparta was coming true.
This is where the huge gap between the local stock market and the S&P 500 and other leading global stock markets began. The same event – a regional agreement and the opening of sea trade routes – was interpreted in two completely contradictory ways on both exchanges.
In Tel Aviv, investors interpreted these arrangements as instability, reduced Israeli maneuver space, lack of decisiveness, strengthening of its surrounding enemies, and increased geopolitical risks (in short, the failure of Israeli plans). All of this clearly creates an urgent need to prepare for bloated defense budgets, large budget deficits, and making the reserve requirement a regular part of the economic agenda.