Israel markets see upside in Netanyahu

Israel's markets have soared despite three years of war and political turmoil, but some investors see further upside if the opposition defeats Prime Minister Benjamin Netanyahu in Tuesday’s election, potentially easing regional tensions and political risk.



Opinion polls point to a tight contest, with neither Netanyahu's ruling Likud bloc nor an opposition alliance centred on former military chief Gadi Eisenkot expected to secure the 61 seats in the 120-seat Knesset needed to govern.



That raises the prospect of lengthy coalition negotiations or even another election. Since the October 7 Hamas attacks in 2023, the Tel Aviv stock market has soared 130%, far outpacing Wall Street's 80% gain, while the shekel has climbed 25%, one of the world's strongest currency performances.



Analysts attribute some of that strength to Israel's tech sector and the global AI boom, while defence spending, which has nearly doubled to around 8% of GDP, has also provided a boost.



With both Netanyahu and Eisenkot vowing to maintain pressure on Hamas and Iran, markets are focused on their broader policy differences.



JPMorgan estimates the shekel could swing as much as 3% depending on the result.