The flow of Israeli savings into American stocks – specifically towards the Standard & Poor’s 500 index – has more than doubled, driven by the repercussions of Israel’s ongoing war on the Gaza Strip for a year, after it had already increased due to the judicial amendments crisis, according to the Israeli economic newspaper Globes.
The newspaper reported that more than half of the new Israeli investments after the war flowed into American stocks, while the rest came from returns on investments in shares of the broader American Standard & Poor’s 500 index.
The newspaper quoted an analysis by Index Research and Development Company as saying that 75 billion shekels ($20 billion) were invested in the Israeli pension market last year, more than half of which (41 billion shekels) flowed into funds tracking the Standard & Poor’s 500 index. », 37% of which went to savings paths in Israeli financial institutions.
Three years ago, the Standard & Poor’s 500 index was restricted to experienced investors in Israel, and only 1% of the total funds invested in the long term were directed to the American index, that is, 6 billion shekels ($1.6 billion) in total.
The Israeli Economic Journal’s analyzes of pumping investments into various savings paths indicate that the increase in the volume of funds directed to the Standard & Poor’s 500 index is mainly concentrated in retirement funds, which manage a total of 869 billion shekels ($231 billion), about 9% of assets. These pensions are invested directly in tracking the index, compared to just 0.5% in August 2021.
In September 2023, the assets of pension funds invested in tracking the Standard & Poor’s 500 index amounted to about 4% of the total, or 28 billion shekels ($7.44 billion), and within a year the amount had nearly tripled to 76 billion shekels ($20.2 billion). ).
In advanced training funds, about 8% of savings (31 billion shekels, or $8.24 billion) are currently in funds tracking the Standard & Poor’s 500 index.
In savings funds, the total amount invested in the index more than doubled within a year, reaching 27 billion shekels ($7.17 billion), or 7% of total assets.
The newspaper pointed out that the year 2024 is considered one of the best years for the Standard & Poor’s 500 index ever, as it reached a new peak and achieved a return of more than 22%, and between January and October of this year the index achieved the fastest growth in the year. The corresponding periods are in the last 24 years.
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The newspaper quoted a source in a financial institution – which it did not name or its institution – as saying that the greatest risk to Israel’s economy as a result of this trend is greater than the risk to the individual investor.
The source added, “For us, as an Israeli economy that is thirsty for investment in Israeli companies, the country’s infrastructure, and local companies, this exit of savers’ money is a curse. Ultimately, we are in a period in which foreign investors almost do not come (to Israel), and from their point of view, they are waiting for clarity.” Things (regarding the war).”
He continued, “Savers’ investments are the pillar of economic growth. If the average Israeli investor or the average Israeli financial institution sends their money abroad, this is, in football language, a counterproductive goal. If we do not invest in ourselves, we will ultimately have less money to finance the investment we need. When you look at “Part of the growth forecast for the economy stems from the expectation that investment will decline at this time.”
