Olmert Bribery Scandal: Investors View
Written by: Aaron Katsman | May 9, 2008
Aaron Katsman
www.IsraelNewsletter.com
With Israel immersed in speculation whether PM Ehud Olmert will be indicted on bribery charges, the question for investors is what the impact will be on the markets? While globally, financial markets hate uncertainty, and just the mention of a leader getting busted for being on the take, would send indices plunging, in Israel I would expect little fallout. Why? Because Israel goes through PM’s at a rate that makes Italy proud. I can’t remember the last PM to serve out his entire 4 year term. In addition, Olmert already has 4 investigations against him. Sorry to say, but Israeli’s have become accustomed to scandal, and coalition uncertainty.
In this particular case, while the local Tel-Aviv Exchange may fall somewhat when it opens for trading on Sunday, I would expect the reaction to be short lived. Keep in mind that opposition leader, and former PM and Finance Minister, Benjamin Netanyahu is a market favorite. He was instrumental in turning Israel around economically, and basically saved the country from bankruptcy, earlier this decade.
Israeli stocks that trade in the US, should be even less effected, as most are export driven, and make most of their sales outside of Israel.
Keep tuned into IOI, as we will track the scandal and report on the impact that any new allegations will have on Israeli stocks.
Disclosure: Author’s fund has no position in any other stock mentioned as of 5/9/08.
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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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