Mar­kets un­fazed by po­lice rec­om­men­da­tions on Ne­tanyahu

Jerusalem Post - - NEWS - • By MAX SCHINDLER

The Tel Aviv Stock Ex­change rose on Wed­nes­day, a sign that for in­vestors and bro­kers it’s busi­ness as usual, de­spite the po­lice rec­om­men­da­tions that Prime Min­is­ter Ben­jamin Ne­tanyahu be in­dicted for bribery and breach of trust.

The TA-35 and the TA-125 – the in­dexes with the most highly cap­i­tal­ized com­pa­nies on the stock ex­change – were up 0.52% and 0.66%, re­spec­tively, as of clos­ing. And the shekel slightly weak­ened against the dol­lar, con­tin­u­ing a weeks-long trend.

“Noth­ing hap­pened eco­nom­i­cally, and even if you take a sce­nario in which Ne­tanyahu is go­ing to step down, it’s spec­u­la­tion,” Ori Green­field, Psagot In­vest­ment House’s chief econ­o­mist and strategist, told The Jerusalem Post.

“And even if Ne­tanyahu would step down and there would be a new gov­ern­ment, the eco­nomic po­si­tion of the new gov­ern­ment prob­a­bly wouldn’t be very dif­fer­ent from the cur­rent gov­ern­ment. So, when you look at the mar­ket, in­vestors see that the econ­omy is stay­ing good and if the mar­ket was in­ter­est­ing be­fore then, they would think that as well now.”

Green­field added that he wouldn’t change his as­set al­lo­ca­tion and stock port­fo­lio be­cause of the po­lice rec­om­men­da­tion.

Is­raeli stocks had fallen sharply last week in re­sponse to gy­ra­tions on Wall Street and fears that global in­ter­est rates would soon start ris­ing. But the mar­kets evinced lit­tle to no con­cern over the fight­ing in Syria and the shoot­ing down of an Is­raeli fighter jet. And the Ne­tanyahu probes have yet to frighten lo­cal in­vestors.

It is now up to At­tor­ney-Gen­eral Avichai Man­del­blit to de­cide whether to in­dict his for­mer po­lit­i­cal ally, a process that could take months.

Given that Ne­tanyahu is the se­cond prime min­is­ter in a decade – af­ter Ehud Olmert – to face po­lice rec­om­men­da­tions that he be in­dicted, it is pos­si­ble that the trend could change how busi­ness­men ap­proach politi­cians.

Namely, the po­lice rec­om­men­da­tion to in­dict the prime min­is­ter could sow fu­ture doubts with in­ter­na­tional in­vestors.

“Is­rael needs for­eign in­vest­ment,” said Shlomo Maital, a se­nior re­search fel­low at the Tech­nion-Is­rael In­sti­tute of Tech­nol­ogy’s Sa­muel Nea­man In­sti­tute, which spe­cial­izes in na­tional pol­icy re­search. “The per­va­sive­ness of high-level cor­rup­tion is grow­ing and must be of con­cern to those who might con­sider send­ing their money to Is­rael.”

Is­rael is ranked 28th in the world in “per­ceived lack of cor­rup­tion,” ac­cord­ing to Trans­parency In­ter­na­tional. Yet, that rak­ing will prob­a­bly fall next year, Maital said, a sign of the shift­ing cul­tural winds.

“Forty years ago, a la­bor min­is­ter, Avra­ham Ofer, com­mit­ted sui­cide sim­ply be­cause there was a re­port that he might have cheated,” Maital said. “To­day? Ev­ery­body does it. The cul­tural norm has changed from ‘Cor­rup­tion brings un­bear­able shame’ to ‘Cor­rup­tion? It’s part of the game.’”

For the pro­fes­sor, cor­rup­tion could scare away smart, young peo­ple from pol­i­tics and force out en­trepreneurs such as Erel Mar­galit, a ven­ture cap­i­tal pi­o­neer.

And, Maital says, cor­rup­tion could un­der­mine Is­rael’s suc­cess as a “Start-Up Na­tion,” rot­ting away dy­namism and en­trepreneur­ship. That would af­fect Is­rael eco­nom­i­cally.

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