JP Morgan warns of growing risk to investing in Israel

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Israeli protesters in Tel Aviv carry placards depicting Benjamin Netanyahu as Julius Caesar during a demonstration against his new hard-right government, on 21 January 2023 (AFP)

Leaked Memo says judicial overhaul has raised questions about Israel’s institutional strength and investment climate

Leading US financial institute JPMorgan has warned of a growing risk of investing in Israel, citing the new government’s overhaul of the judicial system.

“Israel’s local markets have seen a flareup in idiosyncratic risk, as increased geopolitical tensions were added to investor concerns over plans for judicial reforms,” stated the memo. “The judicial reform has raised concerns regarding institutional strength and the investment climate in the country.”

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The internal memo, released on Friday and first reported by Israel’s Channel 12 news, comes after Prime Minister Benjamin Netanyahu cited the bank, along with Goldman Sachs, to defend his judicial overhaul.

“They say that the judicial reform will keep investors away. But two of the biggest and most influential investment banks, JPMorgan and Goldman Sachs, say the exact opposite,” Netanyahu tweeted Sunday, with a screen grab of a JPMorgan trading desk note calling protests in the country “largely noise”.

Friday’s memo, however,  noted the “significant local protests” in Israel against the overhaul. In addition, it said investors should consider prolonged “geopolitical hostilities” stemming from the “less centrist tilt of the current [Israeli] government”.

Israel has been rocked by protests since Netanyahu’s move to overhaul the judiciary. 

The memo’s authors said their “usual stance” had been to “fade flare-ups” in geopolitical political risk, given Israel’s strong fundamentals, but “several caveats and risks apply now”.

Separately, Israel has been struck by soaring tensions in the occupied West Bank. The situation has deteriorated since an Israeli raid on a Jenin refugee camp last month killed nine Palestinians. The next day, a Palestinian killed seven Israelis in a settlement in occupied East Jerusalem.

A total of 35 Palestinians were killed by Israelis in January, making it the deadliest month for Palestinians in the occupied West Bank and East Jerusalem since 2015.

According to data compiled by Middle East Eye, Israeli forces killed more Palestinians in the occupied West Bank in 2022 than in any single calendar year since the Second Intifada.

Tech revolt

Thousands of Israeli tech workers have protested against Netanyahu’s moves to give his government and its allies more control over the appointment of Israeli judges and allow the Knesset to strike down Supreme Court rulings with a simple majority.


The tech sector is one of the main engines of Israel’s economic success, accounting for about 15 percent of the country’s GDP and more than half of its exports.


The memo said Netanyahu’s plans could lead to a downgrade of the country’s credit rating, comparing Israel to Poland, which passed its own judicial reforms in 2016 and suffered a downgrade.

Last week, dozens of Israeli bank directors warned Netanyahu that some of their clients were withdrawing cash from their accounts and exchanging it for US dollars. as they fear the shekel will weaken more as political tension escalates.

Israel‘s currency, the shekel, and its stock market both fell on Monday.

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Disclaimer: JP Morgan warns of growing risk to investing in Israel - Views expressed by writers in this section are their own and do not necessarily reflect point-of-view

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