On Friday, Moody’s issued a dramatic announcement that Israel’s credit rating has been downgraded for the first time ever, from A1 to A2. Despite the significance of this move, investors in the Tel Aviv Stock Exchange were not significantly impacted. The local flagship index, Tel Aviv 35, which trades the largest companies in Israel, only saw about a 0.6% decrease. With the exception of the banking index, which fell by 1.7%, Israel’s economic indicators were characterized by slight declines. Although there is a negative trend, it is not considered catastrophic.
At the same time as the announcement in Israel, history was made on Wall Street with the S&P 500 index breaking the all-time record and closing at more than 5,000 index points. This, combined with high investor optimism, has led to an increase in global stock market risk. Investors are faced with increased risk in both Israel and the US. The American market has performed better than the Israeli market in the past year, with higher returns. However, the geopolitical risk in Israel is much higher and the economic environment weaker.
The government deficit is expected to grow in the short term due to war expenditures, but investors with a longer horizon may find opportunities in