2023-12-29 07:00:00
Title: Institutional Investment Portfolios Accumulate Cash as Issuances Decrease
Yossi Levy, CEO of Moore Investment House, recently commented on the significant accumulation of cash in institutional investment portfolios. He attributed this phenomenon to several factors, including ongoing deposits to provident funds, pension and training funds, a decrease in the volume of issuances in the local market, and the availability of solid investment alternatives due to high-interest rates.
Levy highlighted the interesting observation that Israeli government bond yields, even during the war, were below the equivalent government bond yields of the US government. In contrast, the situation in Israel saw a buildup of cash as the volume of issuances decreased and yields remained high. However, he expressed concern about the potential impact when the government comes to the market to raise funds for war and reconstruction, suggesting that it could lead to an increase in yields.
The CEO also noted that the institutions had reduced their exposure to government bonds until 2023 due to low yields, speculating that the excess supply from the government’s financing needs could potentially cause yields to rise again.
Furthermore, Levy discussed the possibility of the Israeli government seeking funds abroad due to the excess supply of issues in the local market. He predicted that this move would result in the government paying a higher interest rate, which would subsequently affect yields in Israel.
The uncertainty surrounding the end of the war and its impact on the country’s political and economic landscape was also highlighted as a crucial factor influencing the situation.
The commentary provided by Yossi Levy offers valuable insights into the current state of institutional investment portfolios and the potential implications for the Israeli market. As the government prepares to raise significant sums to finance war efforts and reconstruction, the financial industry will undoubtedly be closely monitoring the developments in the coming months.
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