A deadlocked result in Israel’s election tomorrow would be the most damaging outcome for investors worldwide, warns the CEO of deVere Group, one of the world’s largest independent financial advisory organisations.
The comments from Nigel Green come as Israelis vote on Tuesday in their first election since the October 7 attacks and the start of the US-Israeli war with Iran, with polls suggesting neither Benjamin Netanyahu’s bloc nor the opposition led by Gadi Eisenkot will reach the 61 seats needed to govern.
He says: “A stalemate is hard, because it leaves every big question open at once, and markets charge a higher price for that kind of uncertainty.
“A hung Knesset likely means months of coalition wrangling, maybe even another election, with a caretaker prime minister still holding the power to order fresh strikes on Iran.
“For anyone with money in oil, bonds or emerging markets, that’s the scenario to watch.”
The stakes are high because Israeli assets have been on a powerful run. Tel Aviv shares have soared around 130% since October 2023, far ahead of Wall Street, and the shekel has gained about 25%, one of the strongest currency performances anywhere.
“Israeli markets have defied three years of war, powered by tech, AI, and heavy defence spending. Rallies built on that kind of backdrop can turn quickly, and both stocks and the shekel have already slipped around 10% since May.”
Analysts estimate the shekel alone could swing by as much as 3% on the result.
“An Eisenkot win would probably be cheered. Investors would read it as lower political risk and a better chance of calmer relations with Israel’s neighbours.
“A Netanyahu win is more of a known quantity. Markets already know what they’re getting.”
Nigel Green believes the biggest global impact runs through energy.
“Someone who’s never owned an Israeli share is still exposed through oil. Any fresh strike on Iran would likely hit energy prices, push inflation back up and drive government borrowing costs higher, just as bond markets are already on edge.
“And don’t assume an opposition win makes the risk vanish. Both men have promised to keep up the pressure on Hamas and Iran. The difference is in tone, diplomacy, and how far they’re prepared to push.”
Israel’s public finances are another flashpoint. Defence spending sits near 8% of GDP, the highest share among Western economies.
Netanyahu backs a 450 billion shekel military buildup over 12 years, which the central bank warns could lift debt toward 85% of GDP by 2035. Eisenkot argues for reforms instead, including bringing ultra-Orthodox Israelis into the army and the workforce.
“Bond investors care deeply about who pays for all this. Israeli government bonds have returned roughly 30% in two years, more than double the main emerging market benchmarks.
“Holding on to that confidence depends on a credible plan for the bill.”
The implications extend across the region. Some investors believe a weakened Netanyahu government could ease tensions and lift assets such as Lebanese bonds, while a fresh start in Israeli politics could revive talk of wider normalisation with Gulf states.
“The biggest election trade may end up being felt across the Middle East rather than in Tel Aviv. Calmer politics in Israel could unlock trade, energy and infrastructure deals right across the region.”
Global funds remain wary, with the shareholding of Israeli equities at a record low.
“Foreign money has largely sat this rally out. A clean, decisive result could start bringing it back. A messy one keeps it on the sidelines and keeps the war risk alive.”
He concludes: “Israel’s voters decide on Tuesday, and global investors are likely to feel the result in energy prices, bond yields and portfolios for months.
“A clear result, whoever wins, gives markets something to work with. A stalemate leaves the biggest decisions, including on Iran, in limbo.”
