Ella Alcalay: "International sanctions - a nightmare scenario that investors are not pricing in"

Ella Alcalay, chairwoman of IBI Mutual Funds, warns in an interview with Calcalist that the Israeli market is not pricing in the risk of international sanctions over construction in settlements, particularly in the E1 area. According to her, this is a nightmare scenario that could paralyze parts of the economy, unlike the BDS boycott which was "child's play." Alcalay warns of a financial contagion mechanism that would harm banks, credit institutions, and high-tech, and recommends tilting investment portfolios abroad.

In a comprehensive interview with Calcalist, Ella Alcalay, chairwoman of IBI Mutual Funds, warns of an economic nightmare scenario that the Israeli market is not pricing in: international sanctions over construction in settlements, particularly in the E1 area. According to her, the difference between BDS pressures and state-level sanctions is dramatic — BDS was "child's play," while sanctions by states become law that does not depend on the will of individuals. Alcalay explains that 12 countries, including Britain, France, and Canada, have issued a declaration of intent to advance measures against economic activity in settlements. The Israeli banking system is preparing for the possibility that British legislation will prohibit financial institutions from providing financing for projects beyond the Green Line. The immediate risk, according to a legal review prepared for the Banking Association, is the "chilling effect": international financial bodies may tighten checks on Israeli entities for fear of legal and reputational risk. Alcalay emphasizes that unlike Russia, Israel does not have abundant energy or agricultural commodities, and is completely dependent on the global financial system. She notes that more than 200,000 Israelis have left Israel in the past four years, and that an international boycott could be an additional trigger for this trend. Alcalay recommends that investors create an overseas bias in their investment portfolio, especially in the conservative portion, and warns that the risk is currently not priced into bank and insurance company stocks.