How to invest as the shekel strengthens

• Published date: 04 November 2021

Bank Hapoalim head of advising and research Rivka Elgarisi recommends investing in the US, combining tech stocks and value stocks. She said, "Value stocks can be shares of companies in the infrastructures sector, which is very hot and will perhaps bring high returns like tech stocks, although there is smaller volatility. Finance and real estate stocks will also continue to lead as well as private consumption stocks in fields like local marketing chains, and profitable domestic tourism and restaurants. Healthcare will also continue to enjoy growth while the world is suffering from Covid.

She added, "In Israel, the finance sector will continue to demonstrate profitability and high revenue because growth reflects low risk in credit and we see how the mortgage sector is flourishing due to high demand for housing. In the communications sector there are specific companies that we recommend and generally we prefer the stocks of large companies and focus less on smaller companies because at a time when raw materials are becoming more expensive and inflation is rising, larger companies fare better than smaller companies."

Elgarisi stressed that over the years Bank Hapoalim has recommended that investors do not take a deliberate foreign currency exposure. "We do not advise taking a position on the dollar or the euro. Only in situations where the client has dollar or euro linked commitments and wants to invest the money will we do 'back-to-back' so that the client won't be exposed if the same currency strengthens and commitments rise, while the investments have not risen."

In general she doesn't not see any reason to invest in either the dollar or the euro. "The euro has had negative interest rates for some years and the US dollar has been around zero, very similar to the shekel."

Don't take a gamble on foreign currency

Mor Portfolio Management CEO Lior Grinhouse declines to make macroeconomic investment recommendations and focuses more on where not to invest at the moment. He supports Elgarisi's advice. "Whoever has no specific need in foreign currency in order to hedge their activities should not invest in foreign currency. Only if you are a foreign currency company or you want to grow as a country or company for geopolitical reasons should you invest in foreign currency. If you have business activities abroad then it is most logical to work in the currency of the country that you are operating in and not to take a currency risk.

"He added, "When I talk to...