Prime Minister Benjamin Netanyahu's 111-page pardon request to President Isaac Herzog immediately drew domestic and international market attention over government stability and confidence in Israel’s capital markets on Sunday.
Following the politically unprecedented announcement, the TA-35 rose 1.2%, the TA-125 gained 1.3%, the TA-90 added 1.7%, and the TA-Banks index climbed 1.4%.
Political uncertainty could complicate major economic decisions, including the state budget that is slated to come before the government for approval on Thursday. If public and political turbulence continues, investors may demand a higher local risk premium.
Recent weeks saw volatility on the Tel Aviv Stock Exchange as investors responded to political noise. State-linked companies and firms requiring regulatory approvals may face temporary fundraising challenges, potentially affecting market swings.
Foreign investment
International investors are monitoring developments and, in extreme scenarios, could reduce risk investments or delay large projects until the legal and political situation becomes clearer.
Intense public and media pressure surrounding the pardon request could influence confidence in state institutions, indirectly affecting savings flows, loans, and private financial decisions.
International investors are tracking developments and, in stressed scenarios, could scale back risk exposure or delay large projects until the legal and political outlook clarifies. The Bank of Israel has repeatedly flagged elevated macro risks tied to uncertainty, while analysts remain divided on the pace of recovery.