Nearly 60% of bettors back Eisenkot as Netanyahu tipped for huge Israeli election loss to opposition leader Gadi Eisenkot

A close contest ahead

That could lead to extended coalition talks or another election. The vote comes as the global artificial intelligence surge that has supported local markets shows signs of weakening.

Markets weigh election outcome

JPMorgan said an opposition win that improves ties with Western allies and stops the judicial overhaul could support the currency. It said a further Netanyahu-led government could weaken it. Bill Ackman said a government without far-right ministers Itamar Ben-Gvir and Bezalel Smotrich could show Israel was “turning a new page,” potentially helping restore international credibility and expand the Abraham Accords.

Investors see room for gains

IBI Investment House also expects an opposition victory to benefit markets. Chief economist Rafi Gozlan said it could lower Israel’s risk premium, put upward pressure on the shekel and prompt a positive response in local markets.

Still, investors do not necessarily expect Israeli assets to fall if Netanyahu stays in power. Stocks and bonds have held up through years of war and political upheaval, and some investors say they remain confident in the economy.

Union Investment’s Sergey Dergachev has bought Israeli bonds ahead of the vote. He said the firm was “very constructive on Israeli credits” and argued bonds were less vulnerable to major swings, adding that regional conflicts should eventually ease.

Resilience alongside risks

Tel Aviv shares rose about 1 per cent in the final session before Tuesday’s vote, putting their year-to-date gain at roughly 12 per cent. Yet shares and the shekel have each retreated about 10 per cent since May, as global artificial-intelligence indexes also fell.

Copley Fund Research data show foreign investors have been moving away from Israeli equities. The share of global funds holding them has fallen from 34 per cent in 2023 to a record low of 19 per cent. Central bank head Amir Yaron last week stressed the need to “preserve adequate fiscal policy space” given the Iran war.

Israeli government bonds have returned about 30 per cent over the past two years, more than twice the return of the main emerging-market indexes. Some investors see an inconclusive election as the main risk because it could delay budgets, reforms and investment. Menora Mivtachim chief investment officer Lior Yochpaz said businesses had continued to thrive despite political upheaval, judicial-overhaul proposals and regional conflict; the article’s account of his remarks ends mid-sentence.