The repercussions of the unexpected assault on Israel by the Palestinian group Hamas on Saturday continue to unravel, causing the stock markets in Israel and the Middle East to open deep in the red. With the declining stock values, a stage for a potentially unstable week is being set.
Several important stock indexes in the area saw a dip on Sunday, led by Israel’s key TA-35 stock index, which witnessed a huge 7% decline and registered its biggest loss in more than three years. Stocks in Bahrain, Kuwait, Qatar, Oman, and Riyadh exhibited weakness, while the Tadawul All Share Index in Riyadh witnessed a drop of 1.2%. The EGX30 gauge for Egypt dropped by up to 5.4%.
The Hamas attacks against Israel are being entitled as the deadliest attacks in decades posing a major threat to escalate into a broader conflict. Israeli Prime Minister Benjamin Netanyahu declared that the country would undertake a protracted military battle against the extremist group and voiced confidence that Israel would dominate and prevail.President Joe Biden pledged “rock solid” US support for Israel.
Due to Netanyahu’s alliance with Israel’s far-right and their efforts to reform the country’s court, the conflict arose at a sensitive diplomatic period as well as a time of historic division within Israel. The Israeli shekel has reportedly declined near a seven-year low ahead of the upcoming reopening of Israel’s Parliament later this month.
Hasnain Malik, a Dubai-based strategist at Tellimer, a provider of research and data on emerging markets to investors said – “Divisions in Israel’s politics and security structure will be papered over while the military response in Gaza is ongoing, but they are not going away. That will remain a vulnerability for all Israeli asset prices.”
Investors’ attention was drawn to the trade-suspension restrictions of the Tel Aviv exchange by the significant losses in Israeli stocks. A 30-minute pause will occur if the TA-35 Index declines by 8%. In addition, according to the standards, a 12% decline would lead to a complete closure for the day unless the management makes an exception.
The incursions by Hamas struck at a very fragile time for Israel. Foreign investors are concerned about Netanyahu’s efforts to weaken the judiciary, causing widespread mass protests. One of the greatest losses so far this year among a basket of 31 important currencies is the shekel, as tracked by Bloomberg.
Netanyahu’s plans for greater regional integration with his Arab and Muslim neighbors also seem to be on the verge of breaking out. “Regional risk goes up for a while,” says Malik.
The assaults have already cost hundreds of lives on both sides. Palestine’s stock exchange paused trading on Sunday citing “security conditions in the Palestinian territories,” and will be reopening on Monday.
- Published By Team Genuine Reporter