Summary: Israel’s markets have shown
resilience but optimism could evaporate if the war continues to drag. The
conflict is now about as old as the 2006 Lebanon war. The country’s GDP growth
could take a hit, but what about the nation’s biggest listed company Teva Pharmaceuticals?
Can this war boost growth of Elbit Systems, Israel’s leading listed defense
company?
The bloody
conflict between Israel and Hamas rages on, despite cease-fires and truce
talks. So far, more than 1,886 Palestinians and 67 Israelis have lost their
lives. In addition to the tragic loss of life, it is becoming increasingly
clear that the ongoing conflict could be one of the most expensive ones for
Israel.
Market Resilience
Initially,
Israel's stock markets reacted positively to operation Protective Edge. In the
first ten days of the operation, Israel's two leading indices, the TA-100 and
TA-25 climbed by 1.4% and 1.6% respectively. This could be due to a number of
factors.
Firstly, the
current situation is nothing new for the markets that have witnessed several
military operations over the last ten years, from Operation Rainbow in 2004 to
Operation Pillar of Defense in 2012.
Secondly,
both indices, particularly TA-25, feature some of the biggest Israeli
companies, such as the world's biggest generic drug maker Teva Pharmaceutical
(NYSE:TEVA). These are global companies that do not depend heavily on Israel's
market. For instance, in the first six months of this fiscal year, Teva
Pharmaceutical generated more than 81% of its revenues from the U.S. and Europe
while … read full article at Seeking Alpha.
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