"Tel Aviv stocks are rightly cheap"
Published date | 09 June 2024 |
Author | Bar Lavi and Roi Weinberger |
Publication title | Globes (Rishon LeZion, Israel) |
Why is this happening? And where is the money exiting Israel going to? We talked to Yotav Costica, chief investment manager at More Mutual Funds, about the burning issues in the financial markets.
"Foreign investors are leaving Israel, that's a fact. It can clearly be seen in the numbers," Costica says. "If we compare October, on the eve of the war, with the latest published numbers, for March 2024, we see a dramatic decline in holdings by foreign investors in bonds on the local market. Until October, they represented about 15% of total holdings of Israeli government bonds; today, they're below 9%. That's almost NIS 30 million that have exited."
Is the trend worsening?
"Yes. In March-April, the Israeli stock market performed fairly well. In May, we saw growing fears."
"Our children will pay for the county's expensive debt"
Costica commented specifically on the government bond market, after the yield on ten-year bonds rose above 5% last week, for the first time since 2013. Yields have moderated slightly, but the value of Israel government debt is still historically low. "This has implications that should worry all of us," Costica said. "A country raising debt that it needs more than ever, at high interest rates. The consequence for the total budget cake is clear. Interest expense contributes nothing to my life, your life, the lives of all of us, and nothing to the services we receive from the state...
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