Between the Knesset and the Capitol: How Will Investors in Israel Be Affected by Two Election Campaigns Converging into One Week

The coming week presents a rare situation for investors in Israel: the elections for the 26th Knesset and the US midterm elections converge on the same days. We delved into historical data to understand how each election system moves the markets and asked experts which event will have a greater impact on Israelis' portfolios.

The coming week presents a rare situation for investors in Israel: the elections for the 26th Knesset and the US midterm elections converge on the same days. Such a combination has occurred only twice in the last 40 years, in 2022 and 1988. The article delves into historical data to understand which election system will have a greater impact on Israelis' investment portfolios. On the Tel Aviv Stock Exchange, history teaches that the market wants a decisive outcome: in the 12 months following elections, the TA-125 index yielded an average return of 16.4%, compared to 11.5% in the long-term average. In cases without a clear decision, declines of 5.3% were recorded in the three months before the elections. The stock exchange's research unit found a sharp increase in volatility of 31%-45% in the three weeks following elections. In contrast, on Wall Street, investors are pricing in a scenario of Democratic control of Congress. An analysis by Wells Fargo shows that the S&P 500 tends to rise in the year after midterm elections, regardless of the outcome.

Between the Knesset and the Capitol: How Will Investors in Israel Be Affected by Two Election Campaigns Converging into One Week