Zvi Stepak (public relations photo, Flash 90/ Adam Schuldman)
Until now we have not seen the full picture of the outward movement of Israeli money since the legal revolution passed in the Knesset. We usually concentrated on institutional investment or investors in the high-tech industry, but in the background we knew that the impact on the general public would come. Zvi Stepak, a veteran of the local capital market and who serves as the chairman of the Meitav investment house, analyzed the money movement of the general public and the conclusions, how shall we put it mildly?! Nothing.
“The capital markets in Israel react in different ways to Levin-Rotman’s legal plan, to the lack of dialogue between the plan’s supporters and its opponents, and the uncertainty that the current situation creates,” says Stepak. “There are different ways to examine the immediate consequences of the current situation on the capital and financial markets.
More in-
“One of them, and the most important, is the exchange rate of the shekel against the dollar. The second is the level of lag that has opened up between the performance of the Israeli stock market versus the American stock market, and similarly – the performance of the government bond market (for 10 years) versus the performance of the government bond market in the USA, and there are, of course, several other parameters that can be examined.
“It is not clear at this stage what amount Israeli companies and Israelis as individuals transferred abroad. In this matter, various amounts are thrown into the air. What is clear is what is the mindset of the private investors and the institutional investors by examining the movements of funds in the mutual fund industry which provides us with daily data in this regard.
“From examining the trends in the industry from the beginning of the month until Wednesday (22.2 inclusive), the following conclusions emerge: the public has significantly reduced its investment in funds that specialize in stocks in Israel. Since the beginning of the month, it has withdrawn from them an amount of one billion shekels (about 60% of the amount from the active funds and about 40 % of the passive funds).
“At the same time, the public increased its investments in funds specializing in shares abroad by NIS 700 million. The public reduced its investments in mutual funds that specialize in State of Israel bonds and/or bonds of Israeli companies by a whopping NIS 3.4 billion. In addition, the public increased its investments in bonds abroad (foreign currency investment) in the amount of approximately NIS 700 million.”
One of the most popular avenues in recent times is financial funds, and just as there are shekel financial funds, there are also dollar-denominated funds “But, the public’s influx into foreign exchange,” says Stepak, “is even more evident in the dollar-denominated financial funds into which the public poured approximately NIS 1.2 billion. Along with the entry into them, the entry into the shekel financial funds continues – approximately NIS 2.4 billion, although in recent days there has been a noticeable slowdown in the entry into them.”
As for the institutional investors, Stepak says that “so far they have reduced their investments in basket funds that specialize in stocks in Israel by an estimated amount of NIS 550 million, and at the same time increased their holdings in basket funds that specialize in stocks abroad by about NIS 350 million. They reduced their investments in basket funds that specialize in bonds of the State of Israel/Israeli companies by about NIS 450 million, and increased their investments in foreign bonds by about NIS 120 million,” he concludes.
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