Investors are unconvinced by Israeli Prime Minister Benjamin Netanyahu’s pledge to scale back a judicial system overhaul that has triggered months of nationwide protests and threatened to weaken the economy.
(Bloomberg) — Investors are unconvinced by Israeli Prime Minister Benjamin Netanyahu’s pledge to scale back a judicial system overhaul that has triggered months of nationwide protests and threatened to weaken the economy.
The prime minister’s promise to change the judge selection process and abandon a broader overhaul has, so far, failed to rekindle confidence among global investors. Israel’s foreign bonds and the shekel hardly gained on Monday, struggling to recover from a recent selloff, even as stocks rose.
The problem is that Wall Street remains nervous about “protesters, who still fear permanent damage to the country’s democracy,” said Tellimer strategist Hasnain Malik. “All of that still makes for an unhelpful backdrop for Israeli asset prices.”
Netanyahu on Sunday urged investors to pour their money into Israel, saying he wanted to avoid extremes when it came to overhauling the nation’s judicial system.
But his comments spurred even more fury among opponents and protesters who point out that the right-wing coalition is still seeking more control over the selection of judges. A group leading the largest anti-government protest movement in the nation’s history has already vowed to intensify demonstrations.
Money managers and analysts have been warning for weeks about the risk that social and political tensions eventually boil over in Israel’s economy. That’s why one of the key questions worrying investors on Monday comes down to whether Netanyahu’s pullback is enough to soothe the opposition, said Brown Brothers Harriman & Co.’s Win Thin.
“I think it really depends on whether this compromise is enough to end the protests,” said the firm’s New York-based global head of currency strategy. “My sense is no.”
Israel’s hard-currency notes due 2026 were little changed at about 94 cents on the dollar Monday, while the bonds maturing in 2028 stalled near 93 cents, according to indicative price data compiled by Bloomberg.
The shekel, meanwhile, moved between losses and gains against the dollar, while the benchmark stock index rose for a second day.
The prime minister, in a Sunday interview on Bloomberg Television, also cited plans for Israel and Saudi Arabia to deepen their economic and business ties — even if they don’t formally recognize each other. He called Israel “undervalued.”
In the same interview, Netanyahu defended the central bank’s independence and praised Governor Amir Yaron, a critic of the judicial overhaul, and who’s approaching the end of his five-year term. Netanyahu said he’s yet to decide if he’ll ask Yaron to stay on.
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