The airports may be closed, but that isn’t stopping the Tel Aviv Stock Exchange (TASE) from soaring.
As Israel navigates renewed conflict with Iran, the country’s stock exchange did something surprising. Instead of tanking, it did the opposite. The TA-125 Index climbed to record highs of around 4,200 points, which represents a 66% increase compared to this time last year. At the same time, the Israeli shekel strengthened against the U.S. dollar.
That isn’t to say the conflict hasn’t caused disruption and anxiety across the country, but it does demonstrate that there is confidence in Israel’s ability to bounce back from adversity.
“The stock market is a predictor of what the belief or expectation is about what’s going to happen in the future, not what’s happened in the past,” said Ezra Gardner, Partner at Varana Capital. “The stock market in Israel is actually doing the right thing, because the signaling is that Israel is going to boom when this is over. Israel is going to be the winner, and Israel is going to deliver even more on the things that they’ve delivered on in the past, in innovation and helping the world.”
Gardner was supposed to arrive in Israel alongside South Valley CEO Travis Vap, and this episode was supposed to take place in a studio. But when their flight was cancelled hours before take off, we decided to continue our conversation as planned, this time virtually.
It was already in the calendar, so it made sense to everyone. According to both men, not a single meeting with Israeli companies or officials was cancelled.
“To me, these people are in a geopolitical conflict that I can’t imagine because I’m not there and I’m not dealing with it,” said Vap. “But the fact that we’re on calls, on Zoom, on Teams, and it is…4pm, 6pm, 8pm, 10pm Israeli time. It’s just a little overwhelming… it just reinforces what good people there are, people that are focusing on much bigger things than what’s happening right now on the ground.”
The case for the TASE’s trajectory may lie in this response to adversity that has become all too familiar since the early days of the pandemic. Gardner and Vap had been to Israel before (Vap only once) and were struck by the entrepreneurial culture embodied among its people. Despite the country’s challenges and an army mobilization rate that at one time reached 15% of the tech workforce, business rarely slowed.
In fact, for Gardner’s deeptech and hardware portfolio companies — the kind involved in drones, semiconductors, and defense-adjacent infrastructure — closer to 50% of staff were called up. “The productivity actually went up. People worked 10 times harder when half of the staff was gone.”
Gardner spent the first half of his career in the public markets. His experience spans from J.P. Morgan to Michael Dell’s family office, MSD Capital, and running the US equities desk at UBS at an unusually young age. So, when he says the TASE is doing “the right thing,” it carries weight. He argues that the market isn’t ignoring the war – it’s pricing in what comes after it.
