Key Takeaways

• The Bank of Israel kept its interest rate unchanged at 3.25% on October 21, 2026.
• Headline GDP growth is forecast at 5.6% for 2026, or 3.4% excluding production abroad.
• Inflation is forecast at 1.5% for 2026 and 2.1% for 2027, within the 1%–3% target range.
• The Research Department expects the interest rate  to average 3.0% in the third quarter of 2027.
• Israel's Debt-to-GDP is expected to drop to 66.5% in 2027, resuming the general downward trajectory over the past 25 years.
• The bank describes the current period as having a high level of uncertainty, and its forecast may change.

Last updated: October 25, 2026

What did the Bank of Israel publish in October 2026?

On October 21, 2026, the Bank of Israel published its Research Department's quarterly staff forecast for 2026–2027, alongside the Monetary Committee's decision to keep the interest rate unchanged at 3.25%. According to the bank, the forecast was presented to the Monetary Committee on October 20, before the rate decision.

The forecast covers GDP, inflation, the interest rate, unemployment and the government's budget figures. The bank describes it as based on several models, various data sources and economists' judgment.

How fast does the Bank of Israel expect Israel's economy to grow?

The Bank of Israel forecasts GDP growth of 5.6% in 2026 and 7.5% in 2027. Excluding production abroad, its forecast is 3.4% for 2026 and 5.1% for 2027.

These rates of annual GDP growth are unusually high, even compared to the past decade of Israeli growth, which was already about twice the average growth rate of the OECD nations (1.9%) and the United States (2.4%).

The bank says that, under its assumptions, GDP excluding production abroad will continue to converge toward its prewar trend, alongside a recovery of employment. It also expects demand to expand, supported by a lower interest rate environment and risk premium, a recovery in construction, and increased investment in machinery and equipment. Its forecast for fixed capital formation (excluding ships and aircraft) is 10.5% growth in 2026.

Why are there two different GDP growth figures?

The headline figure includes "production abroad," meaning goods sold overseas by Israeli companies through subcontractors or affiliates abroad, which the Bank of Israel says does not reflect domestic activity. For this reason, the bank bases its economic analysis on GDP excluding production abroad.

According to the bank, production abroad grew to about 6% of GDP in recent quarters (5.8% by the second quarter of 2026), following a comprehensive revision of the National Accounts by the Central Bureau of Statistics in August 2026. The bank estimates production abroad will add about 2.2 percentage points to GDP growth in 2026 and 2.4 percentage points in 2027, with uncertainty of at least one percentage point either way. The bank notes that other countries, including Ireland and Denmark, also use adjusted measures.

What does the forecast say about inflation?

The Bank of Israel expects annual inflation of 1.5% in 2026 and 2.1% in 2027, and 2.0% over the four quarters ending in the third quarter of 2027. The bank expects inflation to settle around the midpoint of its 1%–3% target range.

By comparison: U.S. PCE inflation is projected to be 3.7% and 2.3% in 2026 and 2027, respectively.

The bank revised its short-term inflation forecast down, citing recent CPI readings, revisions to several CPI components and the reduction in the fuel excise. Annual inflation was 1.6% in September 2026, according to the Monetary Committee's announcement.

Where does the Bank of Israel see interest rates heading?

The Bank's Research Department expects the Bank of Israel's interest rate to average 3.0% in the third quarter of 2027, compared with 3.25% today. The bank says this is similar to expectations priced in financial markets (3.1%) and to the average of private forecasters (3.1%, in a range of 2.8%–3.5%).

The bank adds that the rate forecast may be revised in line with developments in inflation, economic activity, financial markets, the geopolitical environment and fiscal policy.

What are the fiscal projections?

The bank forecasts a state budget deficit of 4.4% of GDP in 2026 and 4.6% in 2027, with debt-to-GDP at 68% in 2026 and 66.5% in 2027. It attributes the lower 2026 deficit forecast mainly to an upward revision of expected revenues.

The bank also publishes debt-to-GDP excluding production abroad, at 70.0% for 2026 and 70.5% for 2027, to compare debt with domestic economic activity.

Key facts at a glance

What happens next?

The Bank of Israel says the minutes of the monetary discussions before the October decision will be published on November 4, 2026, and the next interest rate decision will be published on Monday, November 23, 2026. The Research Department publishes its staff forecast quarterly. The bank describes the current period as having a high level of uncertainty, and its forecast is based on stated working assumptions that may change.

Frequently asked questions

What is the Bank of Israel's GDP growth forecast for 2026?

In its October 2026 staff forecast, the Bank of Israel projects headline GDP growth of 5.6% for 2026. Excluding Israeli firms' production abroad, which the bank says better reflects domestic activity, the forecast is 3.4%.

What inflation rate does the Bank of Israel expect?

The bank forecasts annual inflation of 1.5% in 2026 and 2.1% in 2027, within its 1%–3% target range. Annual inflation was 1.6% in September 2026.

What is the Bank of Israel interest rate now?

The Monetary Committee kept the rate at 3.25% on October 21, 2026. The Research Department expects it to average 3.0% in the third quarter of 2027.

What is "production abroad" in Israel's GDP?

According to the Bank of Israel, it is Israeli companies' production of goods sold overseas through subcontractors or affiliates abroad, without crossing Israel's borders. It reached about 6% of GDP in recent quarters.

When is the next Bank of Israel rate decision?

The next decision is scheduled for Monday, November 23, 2026, according to the bank.

Sources

• Bank of Israel: Research Department Staff Forecast, October 2026
• Bank of Israel: The Monetary Committee decides on October 21, 2026 to keep the interest rate unchanged at 3.25 percent
• Trading Economics

Important: This content is provided for educational and informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any securities. Investing in international markets, including Israeli securities and defense-related sectors, involves material risks, including but not limited to market volatility, geopolitical risk, sector concentration risk, liquidity risk, currency risk, and the potential loss of principal. Past performance is not indicative of future results. Wise Money Israel does not guarantee any specific outcome, return, or profit. Any references to specific companies are for informational purposes only and should not be understood as a recommendation to buy, sell, or hold any security. Individuals should consult with a qualified financial advisor, tax professional, and/or legal counsel before making any investment decisions. Diversification does not necessarily ensure a profit or protect against loss. © 2026 Wise Money Israel. All rights reserved.

Data, quotes and statistics in this article come from third-party sources that Wise Money Israel has not independently verified; see the Sources section for links.

This article may contain forward-looking statements, forecasts, and opinions of third parties, which are inherently uncertain and may not materialize.

Wise Money Israel is an SEC registered investment adviser; registration with the SEC does not imply a certain level of skill or training.

The post Israel’s Economy Is Growing 5.6%, But Here’s the Number the Headlines Left Out appeared first on Wise Money Israel.

In this ILTV interview, Evan Liberman, Founder and CEO of Wise Money Israel, discusses the characteristics that have helped shape Israel’s economy, including its innovation sector, entrepreneurial culture and ability to adapt during periods of uncertainty.

The conversation also explores how international investors can gain exposure to Israel’s capital markets through Israeli stocks, bonds and other investments.

Interest in Israel’s economy does not mean that investing in Israel is appropriate for everyone. Investors should consider geopolitical uncertainty, currency movements, market volatility, liquidity, investment objectives and personal risk tolerance before making an investment decision.

This interview is provided for general informational purposes only and does not constitute individualized investment advice. Investing involves risk, including the possible loss of principal. Appearance or coverage by a third-party media outlet does not imply endorsement of Wise Money Israel.

The post ILTV Interview: Why Global Investors Are Turning to Israel appeared first on Wise Money Israel.

Resilience is not the absence of risk. It is the ability of businesses, institutions and people to adapt while uncertainty remains.

This ILTV feature examines some of the factors supporting Israel’s economic resilience during an extraordinarily challenging period. It looks at how Israeli businesses and markets have continued to adapt amid ongoing conflict and regional uncertainty.

For investors, the important question is not simply whether Israel’s economy is strong. It is which sources of resilience may prove durable, which may be temporary, and which risks could challenge the outlook.

Watch the ILTV feature to gain a broader perspective on Israel’s economy and the balance between resilience, opportunity and risk.

This feature is provided for general informational purposes only and does not constitute individualized investment advice. Investing involves risk, including the possible loss of principal.

The post ILTV Feature: Inside Israel’s Economic Resilience appeared first on Wise Money Israel.

The Tel Aviv Stock Exchange (TASE) is becoming easier for global investors to access. A Monday–Friday trading week, rising liquidity, new futures contracts, and increased foreign participation are bringing TASE closer to global market norms—even as geopolitical, currency, and liquidity risks remain significant.

Key Takeaways

• TASE’s Monday–Friday schedule provides greater overlap with international markets.
• Equity-trading volumes and foreign participation have increased materially.
• New futures products are giving institutions better tools for managing exposure.
• Israel’s IPO market strengthened during the first half of 2026.
• Geopolitical, currency, and liquidity risks remain important considerations.

Last updated: August 30, 2026

What was once viewed by many foreign investors as a relatively small regional market is increasingly behaving like a more globally connected exchange. Trading volumes are rising, foreign participation is improving, and market reforms are reshaping liquidity conditions across equities, bonds, and derivatives.

International investors have historically faced several structural limitations in Israel’s capital market, including liquidity constraints, differences in the trading calendar, and limited accessibility. Those obstacles have not disappeared, but conditions have improved materially.

During the first half of 2026, average daily equity-trading volume reached NIS 5.7 billion, while TASE’s equity-market capitalization reached NIS 2.7 trillion at the end of the second quarter. These figures suggest that Israel’s capital market is becoming deeper, more tradable, and increasingly relevant to international investors. According to TASE’s first-half 2026 results, trading activity and foreign participation increased following the transition to Friday trading.

Why is the Tel Aviv Stock Exchange attracting foreign interest?

The primary drivers are stronger liquidity, improved access, market reform, and exposure to sectors with long-term global relevance.

Average daily equity-trading volume reached NIS 5.7 billion during the first half of 2026, an increase of 65% compared with the average for 2025. The exchange also reported a substantial increase in foreign participation following its transition to a Monday–Friday trading week.

For foreign institutions, market accessibility can matter as much as political headlines. Global investors may accept volatility when a market remains liquid and operational. Historically, Israel’s Sunday–Thursday trading week created friction for portfolio managers in London, New York, and other global financial centers by limiting overlap with international trading hours.

The new calendar reduces some of that friction, making Israeli securities easier for international investors to monitor and trade alongside positions in other developed markets.

Key developments driving foreign interest

What changed after the move to a Monday–Friday trading week?

The calendar change aligned TASE more closely with global markets and was followed by higher Friday trading volumes and increased foreign participation.

During the first half of 2026, average Friday equity-trading volume reached NIS 4.6 billion, compared with average Sunday volume of NIS 1.6 billion in 2025. Foreign investors accounted for 41% of Friday trading, compared with 12.5% on Sundays in 2025.

This matters because global capital tends to favor markets that fit naturally into international workflows. Greater synchronization with European and U.S. markets can improve execution, price discovery, arbitrage activity, and institutional engagement.

For years, Israel’s trading calendar was an anomaly. It now resembles the schedule used by most developed exchanges.

The reform may also improve Israel’s position in global asset-allocation decisions. Large passive and institutional funds prefer markets that align operationally with international standards. Israel is already classified within developed-market benchmarks, but greater tradability may support larger allocations over time.

Why are Israeli equities outperforming despite geopolitical risk?

Israeli equities showed notable resilience during the first quarter of 2026, supported by sector composition, domestic capital flows, and continued economic activity.

The TA-35 gained 12.9% year to date as of August 30, 2026, while the Dow Jones Industrial Average gained 10.7% over the same period.

This performance may appear counterintuitive. Israeli markets continued operating amid regional conflict and heightened tensions involving Iran and Hezbollah.

Part of the explanation lies in sector composition. Israeli indices include substantial exposure to banks, defense-related businesses, energy infrastructure, and technology companies that have benefited from domestic activity and increased global security spending.

Another factor is capital repatriation. According to TASE data, Israeli investors reduced exposure to some foreign-equity products while increasing purchases of local index products.

Foreign investors may also be distinguishing between short-term geopolitical headlines and Israel’s longer-term economic and technological capabilities. The economy’s continued operation through prolonged instability has become part of the investment case.

How is TASE improving liquidity and market structure?

TASE is addressing liquidity through market making, new derivatives, and reforms intended to broaden participation.

Liquidity at the scale required by international institutions remains a central challenge for Israel’s capital market. Smaller markets often have wider spreads, lower institutional participation, and less trading depth than larger developed exchanges.

One notable initiative is the Tailor-Made market-making program, which is designed to improve liquidity and broaden the investor base for participating companies. According to TASE management, foreign investors accounted for approximately 37% of trading in Tailor-Made equities during the first quarter of 2026, compared with approximately 31% across the wider equity market.

The exchange is also expanding its derivatives market. Since TASE launched futures on the TA-35, TA-90, and TA-Banks5 indices in September 2024, combined monthly equity-index futures volume grew from approximately 7,500 contracts in December 2024 to approximately 127,500 in July 2026. TASE expanded the market further by launching TA-125 futures in March 2026; those contracts accounted for approximately 37,500 contracts in July. These July figures are calculated from TASE’s reported daily averages across 22 trading days. View TASE’s derivatives trading statistics.

This development is important because institutional investors require effective hedging tools. A deeper derivatives market allows foreign funds to manage exposure more efficiently instead of treating Israeli equities as purely directional investments.

Why are foreign investors becoming more active in Israeli stocks?

Foreign investors are gaining better access to Israeli companies offering exposure to innovation, cybersecurity, defense technology, healthcare, and energy infrastructure.

Many international investors want exposure to these themes but have historically viewed the local market as too narrow or illiquid. That perception is beginning to change as trading conditions improve and the range of listed and tradable products expands.

IPO activity also accelerated. During the first half of 2026, 15 new companies completed IPOs on TASE, raising approximately NIS 6.1 billion, compared with nine IPOs during the same period in 2025.

Meanwhile, the Israeli government successfully raised capital in domestic and international debt markets during a period of geopolitical stress. That reinforced confidence that global capital markets remained accessible to Israeli issuers.

Foreign investors are also paying closer attention to Israel’s defense and security ecosystem. Technologies developed and tested locally are increasingly relevant to global demand, particularly in drones, cybersecurity, missile defense, and intelligence systems. For additional context, read The Rise of Israeli Defense Stocks: What Global Investors Need to Know Now.

For international investors, TASE increasingly offers exposure to sectors tied to long-term technological and geopolitical trends rather than only to Israel’s domestic economic cycle.

What opportunities and risks should investors understand?

The opportunity is meaningful, but the risks remain substantial.

Israel remains exposed to geopolitical shocks, currency volatility, changing interest rates, and periods of sudden market stress. Liquidity is improving but remains below that of larger developed exchanges, particularly outside the most actively traded securities.

Foreign investors should also recognize that sharp inflows can reverse during periods of heightened uncertainty. Markets that rise rapidly may be vulnerable to equally sharp corrections.

At the same time, completely ignoring Israel is becoming harder for globally diversified investors to justify. The country’s capital market is increasingly connected to major global themes, including defense spending, cybersecurity, energy infrastructure, healthcare innovation, and artificial intelligence.

The relevant question is not simply whether Israel belongs in a portfolio, but what level and type of exposure are appropriate for an investor’s objectives, time horizon, risk tolerance, and broader asset allocation.

Important: This article is provided for general informational and educational purposes only and does not constitute individualized investment, legal, or tax advice. Investing involves risk, including the possible loss of principal. Investors should consult qualified professional advisers before making investment decisions.

The post Why Global Investors Are Turning to the TASE appeared first on Wise Money Israel.

In this ILTV interview, Evan Liberman, CEO and Portfolio Manager of Wise Money Israel, discusses how Israel’s economy has demonstrated resilience during an extraordinarily challenging period.

The conversation examines some of the forces supporting Israel’s economy while also recognizing the risks and uncertainties investors should consider before making investment decisions.

This interview is provided for general informational purposes only and does not constitute individualized investment advice. Investing involves risk, including the possible loss of principal. Appearance on a third-party media outlet does not imply endorsement of Wise Money Israel.

The post Israel’s “Miracle Economy”: Evan Liberman on ILTV appeared first on Wise Money Israel.

Israel’s defense sector has moved from a specialized corner of the local market to one of the most closely watched areas of the Tel Aviv Stock Exchange. As global security needs evolve, Israeli defense companies are attracting growing investor attention because their technologies are not theoretical — they are being tested, refined, and deployed under real-world conditions.

What Is Driving the Rise of Israeli Defense Stocks on TASE?

The short answer is sustained conflict combined with global demand for proven systems. Over the past two and a half years, Israel has faced continuous security pressure across multiple fronts, from Gaza to Lebanon and tensions involving Iran. This has translated into a real-time testing ground for military technology. Financial markets tend to reward visibility, and Israeli defense companies now offer exactly that: systems that are not theoretical but operational.

The Tel Aviv Stock Exchange has reflected this shift. A dedicated defense index, launched just six months ago, has already recorded gains of 31%, with early performance suggesting investors view the sector as structurally supported rather than cyclical. This is not a short-term spike driven by headlines. It is a repricing of companies whose products are now central to modern warfare.

At a broader level, global defense spending has been rising following the Russia-Ukraine war, and war in the Middle East has added another layer of urgency. Israeli firms sit at the intersection of these trends.

Recent reporting highlights that global demand for Israeli defense systems has accelerated meaningfully, with exports reaching record levels as countries prioritize technologies that have been tested in real-world conditions. In particular, systems related to air defense, drones, and battlefield intelligence have seen heightened interest from Europe and other regions responding to evolving security threats.

This growing demand reflects a broader shift in procurement priorities: governments are increasingly favoring solutions that demonstrate proven performance under operational stress. Israel’s defense sector, shaped by continuous real-time deployment, is therefore gaining strategic relevance beyond its domestic market.

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Which Israeli Defense Companies Are Listed on the Tel Aviv Stock Exchange?

Israel’s defense ecosystem includes both large, globally recognized firms and smaller, specialized companies. The larger players provide scale and stability, while smaller firms often deliver niche technologies tied to emerging battlefield needs.

Here are several publicly traded defense companies listed on the Tel Aviv Stock Exchange:

Elbit Systems stands out as the anchor of the sector. This company provides a benchmark for international demand. Meanwhile, companies like NextVision represent the newer wave, focused on components critical to unmanned systems.

This mix gives investors exposure across the value chain, from full-system integrators to specialized component suppliers.

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How Have Recent Conflicts Increased Demand for Israeli Defense Technology?

Modern warfare has shifted away from large, conventional engagements toward distributed, technology-driven systems. The wars involving Israel over the past two and a half years have accelerated this transition. Drones, precision-guided systems, and layered air defense have moved from supporting roles to central pillars.

Israeli technology has been shaped directly by these conditions. Systems such as Iron Dome and more advanced layered defense solutions are not just theoretical frameworks; they have been deployed repeatedly under real threat conditions. This is relevant for procurement decisions abroad. Governments are less interested in untested systems and more focused on what works under pressure.

There is also an economic dimension. Analysts have increasingly highlighted the “cost asymmetry” problem: cheap drones or rockets forcing defenders to use expensive interceptors. Israel’s development of lower-cost solutions, including laser-based interception systems co-developed by Elbit Systems, directly addresses this imbalance.

The result is a shift from domestic necessity to global adoption. Technologies refined in Israel are now being integrated into defense strategies in Europe, North America, and parts of Asia.

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Why Are Investors Paying Attention to Smaller Israeli Defense Companies?

The larger Israeli defense players are already well known and often valued accordingly. The real volatility — and potential upside — may sit with smaller companies.

Recent market reactions illustrate this phenomenon clearly. During periods of escalation, smaller defense stocks have posted sharp one-day gains, in some cases exceeding 10%–20%. Companies such as Aerodrome, Third Eye Systems, and others tied to drone and surveillance technologies have reacted quickly to geopolitical developments.

Next Vision Stabilization System supplies sophisticated camera systems, including infrared cameras, that can be mounted on drones

This behavior reflects two realities. First, smaller firms are often more directly exposed to specific technologies, such as UAV components or tactical communications. Second, they remain underfollowed, meaning price discovery can be abrupt.

However, this cuts both ways. Some of these companies have also experienced significant drawdowns over the past year. In this segment of the market, volatility is not an aberration but a defining characteristic — one that demands careful positioning rather than passive exposure.

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How Can Foreign Investors Access Israeli Defense Exposure?

Foreign investors have several routes into the Israeli defense sector, and the choice depends on their level of sophistication and access.

Currency is also a factor. The shekel’s strength over the past year — and really over the past 25 years — has significantly amplified returns for foreign investors, though currency gains cannot be guaranteed for future investors.

One path is through a few dual-listed companies such as Elbit Systems, which trades on Nasdaq. This removes direct exposure to Israeli currency because the shares are traded in U.S. dollars, while still providing exposure to Israeli defense demand. Unfortunately, only a small number of Israeli companies in the TASE defense index are dual-listed on both TASE and Nasdaq.

For those with access to TASE directly — and who desire shekel exposure that may or may not increase returns — the new TASE defense index offers a diversified entry point. It aggregates companies across the sector, reducing single-stock risk.

But not all companies in this sector have equal fundamentals or equal promise. Another method for gaining Israeli defense exposure, together with shekel exposure, is through a managed investment account with an Israeli-licensed portfolio manager or a U.S. SEC-registered investment adviser firm. Wise Money Israel is licensed locally in Israel and registered with the SEC, and performs its own fundamental analysis on Israeli companies, including defense companies, when investing on behalf of clients in what it believes will provide the client a better risk-adjusted return.

Another indirect route is through global defense ETFs, some of which include a small number of Israeli companies as part of broader international holdings. Many of these ETFs limit the inclusion of Israeli defense firms when they have geographic mandates, such as U.S.-domiciled-only exposure. Therefore, buying such an ETF may dilute the specific exposure to Israeli defense firms.

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What Risks Should Investors Consider Before Investing in Israeli Defense Stocks?

The risks of investing only in this volatile sector are real and, if ignored, expensive. Defense spending is ultimately political. While current trends point upward, they are not guaranteed. A shift in diplomacy, a de-escalation in key regions, or budget reprioritization could slow procurement cycles more quickly than markets expect.

Valuation is another pressure point. After a strong run, parts of the sector are no longer attractively priced. Investors buying into momentum without a clear view of earnings durability risk paying for growth that may already be reflected in the share price.

Concentration risk also remains. Much of the sector’s demand is tied, directly or indirectly, to geopolitical instability. If tensions ease materially, order growth may not collapse, but it could normalize, and markets tend to reprice that shift quickly.

Smaller companies add a further layer of risk. Many rely on a narrow customer base or a limited number of contracts. Execution missteps, delays, or technological shifts can have disproportionate effects on their valuation.

These risks do not invalidate the investment case, but they do require discipline. In practice, they are best managed through active oversight. A portfolio manager with a clear mandate to anticipate emerging economic and financial trends — rather than react to headlines — can adjust exposure, rebalance positions, and differentiate between structural growth and temporary enthusiasm.

Conclusion

Seen in that light, the broader investment case becomes clearer. The rise of Israeli defense stocks is not simply a reaction to recent conflict. It reflects a deeper shift in how military capability is developed, tested, and ultimately procured. Systems proven under real conditions are gaining relevance far beyond Israel, and financial markets have begun to price that reality.

For investors, the opportunity is clear but not without complexity. This is not a passive story. It requires selectivity, an understanding of geopolitical drivers, and a willingness to navigate volatility. Those who approach the sector with discipline rather than enthusiasm may be better positioned to participate in its long-term potential.

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Start Your Investment in Israel Today

IMPORTANT DISCLOSURES & RISK INFORMATION

This content is provided for educational and informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any securities. Investing in international markets, including Israeli securities and defense-related sectors, involves material risks, including but not limited to market volatility, geopolitical risk, sector concentration risk, liquidity risk, currency risk, and the potential loss of principal. Past performance is not indicative of future results. Wise Money Israel does not guarantee any specific outcome, return, or profit. Any references to specific companies are for informational purposes only and should not be understood as a recommendation to buy, sell, or hold any security. Individuals should consult with a qualified financial advisor, tax professional, and/or legal counsel before making any investment decisions. Diversification does not necessarily ensure a profit or protect against loss. © 2026 Wise Money Israel. All rights reserved.

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The Israeli shekel has become an increasingly important part of the investment case for Israel. As the currency has appreciated, foreign investors have gained a clearer signal of confidence in Israel’s economy, capital markets, and long-term resilience. For investors seeking international diversification, exposure to Israeli assets now offers not only access to a dynamic market, but also the potential benefit of currency strength.

What Is Driving the Strengthening of the Israeli Shekel?

Over the past 12 months, the Israeli shekel has strengthened sharply, rising to levels not seen in decades. The Israeli currency broke a 32-year high as it moved below the 3 shekels per U.S. dollar mark last week. The shekel has gained roughly 68% against the U.S. dollar since mid-2002.

In just the past 12 months, local currency gained 24% against the USD, outpacing almost all major currencies and signaling a marked shift in market sentiment. Among major freely traded currencies, a 20%+ appreciation in a single year is highly unusual — placing the shekel among the strongest global performers in recent history.

This appreciation reflects a combination of improving geopolitical expectations, resilient economic performance, and supportive global conditions. Recent developments in the Middle East and a decline in Israel’s risk premium have played a central role in shifting investor sentiment, encouraging renewed capital inflows into local markets.

At the same time, the domestic economy has continued to perform, led by its technology sector and supported by steady capital inflows from abroad. Israel’s high-tech industry remains a key driver of foreign currency earnings, while continued startup fundraising and investment activity have helped anchor the shekel’s strength. Even during periods of heightened uncertainty, the economy has demonstrated an ability to absorb shocks without major structural damage.

External factors have also contributed. The broader weakening of the U.S. dollar, alongside the recovery in global equity markets, has reinforced the shekel’s appreciation, particularly through institutional investment flows and hedging activity. Taken together, these forces point to a currency move driven by both domestic fundamentals and global dynamics, rather than a short-term fluctuation.

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Why a Strong Shekel Matters for Foreign Investors

A strong shekel signals growing confidence in Israel’s economic and financial system, even against a complex geopolitical backdrop. Currency appreciation typically reflects capital inflows, reduced risk perception, and expectations of future stability, all of which are central considerations for international investors.

For those allocating capital, currency direction has a direct impact on both risk and return. A strengthening shekel reduces the likelihood that exchange-rate movements will erode gains, while also suggesting that local assets are benefiting from sustained demand. This can make the Israeli capital market more attractive relative to peers, particularly in periods when global investors are seeking resilient and differentiated exposure.

There is also a behavioral dimension. Strong currency performance tends to attract attention from institutional investors tracking relative market strength. As capital reallocates toward outperforming markets, the shekel’s appreciation can reinforce its own momentum, further strengthening the investment case.

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How a Strong Shekel Supports Israeli Market Performance

The relationship between currency strength and market performance is often mutually reinforcing. In Israel, the appreciation of the shekel has coincided with gains in the local equity market, pointing to a broader improvement in investor sentiment.

As equity markets rise, they tend to attract additional foreign capital, which in turn supports the currency. This dynamic has been particularly visible in Israel over the past 12 months, with the local equity market (TA-35) delivering gains of around 77% alongside a 24% appreciation in the shekel against the USD. Combined together, the TA-35 delivered a118% gain in USD-terms.

This creates a feedback loop in which stronger markets and a stronger currency reinforce one another. For foreign investors, this alignment can enhance both entry conditions and potential returns.

Institutional investment strategies further amplify this dynamic. Global funds reallocating toward markets demonstrating relative strength can increase exposure to Israeli assets, adding momentum to both market performance and currency appreciation. In such an environment, the shekel becomes both a reflection of investor confidence and a driver of broader market momentum.

Also, the strengthening of the shekel is good news for many Israelis. The strengthening of the shekel is leading to price reductions in retail chains, airline tickets, and overseas shopping, and supports Israeli consumers by lowering inflation. This is fueling Israeli consumption as the war begins to wane.

Israeli importers and retail chains benefit significantly from the strengthening shekel. Expenses are in cheaper foreign currency and revenues are in strong shekels.

One example of this dynamic can be seen in the Israeli stock Neto Malinda, a food importer our firm currently holds. Although the company does not officially disclose FX impact, estimates suggest that every 1% strengthening of the shekel adds about 17 million shekels to its bottom line.

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IMPORTANT DISCLOSURES & RISK INFORMATION

This content is provided for educational and informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any securities. Investing in international markets, including the Israeli stock market, involves material risks, including but not limited to currency risk and the potential loss of principal. Wise Money Israel does not guarantee any specific outcome, return, or profit. Individuals should consult with a qualified financial advisor, tax professional, and/or legal counsel before making any investment decisions. Diversification does not necessarily ensure a profit or protect against loss. © 2026 Wise Money Israel. All rights reserved.

The post Why a strong shekel is attracting foreign investors to Israel’s capital market appeared first on Wise Money Israel.

For faith-driven investors, managing money is never just about returns. It is a declaration of values, a stewardship of blessing, and an expression of covenant faith.

Biblically responsible investing (BRI) asks one foundational question: Is my portfolio honoring God?

This guide outlines one approach to building a faith-based portfolio that aligns with Scripture, and discusses how investing in Israel’s flourising stock market may be considered within a broader truly biblical investment framework.

Wise Money Israel, an Israel-based SEC-registered investment advisory firm, provides specialized guidance and serves as your guide at every step, bridging the gap between biblical conviction and market expertise.

What Is Biblically Responsible Investing?

Quick Answer:

Biblically responsible investing, also known as BRI, is a values-based investment strategy that aligns a portfolio with Christian or Jewish scriptural principles. It combines negative screening (excluding immoral industries) with positive screening (actively investing in areas that reflect God’s purposes, such as aligning with Israel). BRI treats financial stewardship as an act of faith, not just a financial decision.

Biblically responsible investing goes far beyond simply removing “sin stocks” from a portfolio. It is a proactive, purpose-driven discipline that asks: Where is God at work in the world, and can my capital follow?

While traditional BRI screens exclude companies involved in abortion, pornography, gambling, or predatory lending, a fully developed biblical portfolio also intentionally invests in companies and markets aligned with human flourishing, innovation, and God’s redemptive purposes.

For millions of Christian and Jewish investors, that conviction leads directly to Israel, the Land at the center of Scripture’s great promises.

Why Israel Is the Cornerstone of Biblical Investing in 2026

Israel’s modern economic rise is one of the most compelling stories in global finance. From a nation established against all odds, Israel has grown into a world-leading innovation hub - the “Startup Nation,” - driving breakthroughs in technology, agriculture, renewable energy, healthcare, and infrastructure.

But for the biblically minded investor, Israel’s significance runs even deeper. Scripture describes the restoration of Israel as one of the defining movements of the end times. Investing in Israel is participating in that restoration; tangibly, financially, and faithfully.

The Financial Case for Investing in Israel’s Stock Market

• Tel Aviv 35 Index outperformance: Israel’s flagship stock benchmark has outperformed America’s S&P 500 over various periods (the last 1, 2, 5, 10, 20 and 25-year periods in dollar terms), illustrating the historical performance of the Israeli market relative to U.S. benchmarks during these periods. Of course, past performance is not a guarantee of future results, market conditions vary significantly and there could be periods where Israeli’s stock benchmark does not beat the S&P 500.
• Shekel appreciation: International investors should be aware that fluctuations in the USD/ILS exchange rate will impact total returns, providing the potential for either currency gains or losses in addition to market performance. The Israeli shekel has appreciated against major currencies (almost 60% over the USD in the past 24 years), this presents international investors potential currency gain or loss in addition to market returns.
• NASDAQ leadership: For those seeking to concentrate on the tech sector, Israel has more NASDAQ-listed companies per capita than any country outside the United States, a measure of its tech-driven growth.
• Diversification opportunity: Based on historical data from 2010–2025, Israeli equities have shown different performance cycles than U.S. markets. This may offer an opportunity for portfolio diversification alongside faith-based alignment.

The Biblical Case for Investing in Israel

• Genesis 12:3: God’s covenant promise to bless those who bless Israel is foundational to the biblical investing thesis for many faith-driven investors.
• Psalm 122:6: “Pray for the peace of Jerusalem.” Investing in Israel’s economic health is a tangible expression of solidarity with the Jewish people and land.
• Prophetic restoration: From Isaiah to Ezekiel, Scripture foretells Israel’s rebuilding. Faith-based investors increasingly see Israeli market participation as alignment with that prophetic narrative.

How to Build a Biblically Responsible Portfolio: 6 Steps

The following steps reflect WMI’s framework for building a faith-based investment portfolio that integrates biblical principles with sound financial strategy and Israel’s market at the core.

Step 1: Define Your Biblical Values and Financial Goals

Every biblically responsible portfolio begins not with market data, but with conviction. Before selecting a single investment, clarity on your values determines everything that follows.

Key questions for faith-based investors to answer first:

• Which industries or business practices conflict with my biblical convictions?
• Do I feel called to actively support Israel and the Jewish people financially?
• What is my investment time horizon, income need, and risk tolerance?
• Am I seeking growth, income, preservation of wealth, or a balanced combination?

At Wise Money Israel (WMI), every client relationship begins with these questions. Your convictions shape your portfolio, not the other way around.

Step 2: Screen Out Investments That Conflict with Your Faith

Negative screening removes investments that violate biblical standards. Most investors are surprised to discover how many conventional index funds contain holdings in industries that contradict their faith.

Common biblical exclusion screens include:

• Abortion and abortifacient pharmaceutical companies
• Pornography and adult entertainment producers
• Gambling operators and predatory lenders
• Companies that actively undermine religious liberty or traditional family values
• Businesses with significant ties to nations openly hostile to Israel

WMI advisors conduct thorough market audits, identifying these conflicts and choosing holdings to ensure your investments reflect your faith, not contradict it.

Step 3: Pursue Positive Impact, Invest Where God Is Moving

The most powerful dimension of biblically responsible investing is its forward-looking, positive focus. This is where Israel’s stock and bond market becomes a central opportunity for faith-driven investors.

Israel’s ongoing economic rebuilding efforts provide current opportunities for faith-driven investors to consider as part of a long-term allocation strategy.                      

Growing Israeli sectors aligned with biblical values:

• Technology & Cybersecurity: Israel’s “Startup Nation” innovation is a global leader in AI, cybersecurity and many other world-leading technologies.
• Renewable Energy: Solar energy and water desalination technology that reflects stewardship of God’s creation.
• Agriculture: Israeli expertise in making the desert bloom, a literal fulfillment of Isaiah 35:1, is producing global food security solutions.
• Infrastructure & Tourism: Transportation, housing, and tourism projects supporting Israel’s ongoing economic initiatives.

Because WMI is headquartered in Israel, we provide on-the-ground market intelligence. We know these sectors, the companies within them, and the opportunities that are emerging right now.

Step 4: Diversify Wisely Within Your Biblical Framework

Biblical wisdom affirms the importance of diversification. Ecclesiastes 11:2 counsels: “Divide your portion to seven, or even to eight.” This ancient principle maps directly onto modern portfolio theory.

A balanced biblically responsible portfolio may include:

• Israeli equities across multiple sectors (technology, food production, energy, etc.)
• Biblically screened Israeli stocks in Israel and abroad meeting faith-based criteria
• Fixed-income instruments from companies that meet faith-based criteria

WMI advisors construct allocations tailored to each client’s unique goals, risk profile, and faith convictions, ensuring both financial integrity and biblical alignment.

Step 5: Partner with a Faith-Driven, Israel-Based Advisor

Proverbs 11:14 reminds us: “In an abundance of counselors there is safety.” Choosing the right advisor may be the most consequential step in building a biblically responsible portfolio, especially when your strategy centers on the Israeli market.

Most advisors who claim expertise in biblical investing may never have set foot in Israel. Wise Money Israel is different.

Why Wise Money Israel?

Most investment advisors talk about Israel from a distance. WMI lives it.

• Israel-based team with firsthand market access and on-the-ground insight
• Faith-driven approach that integrates biblical principles into every investment decision
• Extensive experience navigating the Tel Aviv Stock Exchange for international investors

When you work with WMI, you are not simply hiring a financial advisor. You are partnering with a team that believes what you believe, stands where you stand, and sees Israel’s potential through the same lens of faith.

Step 6: Monitor, Review, and Stay Aligned Over Time

Building a biblically responsible portfolio is an ongoing commitment, not a one-time decision. Markets evolve, companies change their practices, and your own life circumstances shift. Regular portfolio reviews ensure continued alignment between your investments and your values.

WMI’s ongoing advisory support includes:

• Regular performance updates on Israeli market sectors and the Tel Aviv indices
• Updating your Israeli portfolio when holdings fall out of alignment with your biblical screening criteria
• Educational resources on Israel’s economic developments and market movements
• As Israel’s market evolves, WMI provides strategic rebalancing to keep your portfolio aligned with your goals

Frequently Asked Questions About Biblical Investing and Israel

These questions reflect what investors most frequently ask when exploring biblically responsible investing and Israel’s stock market.

What does the Bible say about investing?

The Bible consistently affirms wise financial stewardship. Proverbs 13:11 teaches that “whoever gathers money little by little makes it grow.” Ecclesiastes 11:2 counsels diversification. Matthew 25 (the Parable of the Talents) teaches that God expects us to grow what He has entrusted to us actively. Biblical investing applies these principles to modern portfolio management.

How do I start investing in the Israeli stock market?

The most effective way for international investors to access Israel’s stock and bond market is through a trusted Israel-based advisor like Wise Money Israel. WMI provides direct accefss to Tel Aviv Stock Exchange opportunities, sector-specific guidance, and Israel-based expertise that helps investors navigate the market with confidence and biblical conviction.

Why should Christians invest in Israel?

Christians who take Genesis 12:3 seriously - God’s promise to bless those who bless Israel - see investing in Israel’s economy as a natural extension of that covenant commitment. Beyond the biblical rationale, Israel’s technology-driven economy has produced notable market performance, making it both a biblical and financially compelling choice.

Is it safe to invest in Israel right now?

All markets have volatility.

Israel’s economy has historically maintained functionality during periods of conflict. While this historical trend exists, prospective investors must carefully consider that regional instability poses unique and significant risks to capital preservation and that past economic performance during conflict is not a guarantee of future stability.

Israel’s economy has maintained positive growth, even during periods of conflict. For example, Israel’s GDP averaged 1.9% between 2023-2025, and its economy did not go into recession during the seven-front war. That growth rate is in line with other OECD nations that were not at war during this timeframe (OECD average: 1.6%). Of course, historical resilience is not a guarantee of future stability.

For example, the Tel Aviv 35 Index has historically delivered strong long-term performance over many periods of time, as discussed above. Index performance is shown for illustrative purposes only, and indices are unmanaged and cannot be invested in directly.

For many investors, a managed account of diversified individual Israeli stocks may be an effective way to seek exposure to Israeli market dynamics while adhering to specific biblical criteria using WMI’s on-the-ground market intelligence.

What is the difference between ESG investing and biblical investing?

ESG (Environmental, Social, Governance) investing applies secular progressive criteria to portfolio selection. Biblical investing applies scriptural principles, which may align with some ESG screens but diverge on others. For example, biblical investors often specifically support Israel’s economy, a commitment that ESG frameworks do not address. BRI is grounded in faith conviction, not political ideology.

What sectors in Israel are best for faith-based investors?

Israel’s leading sectors for biblically aligned investors include technology and cybersecurity, renewable energy and water technology, precision agriculture, and infrastructure development. All of these contribute to human flourishing and align with values around stewardship and restoration. WMI provides specific sector guidance based on each client’s goals.

Can I invest in Israel through Wise Money Israel if I live in the United States?

Yes. WMI serves investors from 34 nations, including those based in the United States, providing access to Israeli market opportunities typically unavailable through domestic brokerages. As an Israel-based firm, licensed by the Israel Securities Authority and registered with the U.S. Securities and Exchange Commission (SEC), WMI offers the on-the-ground expertise and direct market access that international investors need to participate effectively in Israel’s economy.

Your Portfolio Can Be Both Profitable and Purposeful

The world’s financial markets offer many paths but only one invites you to invest in the fulfillment of biblical prophecy while seeking to meet your long-term financial objectives through the Israeli market. A biblically responsible portfolio anchored in Israel is not just an investment strategy. It is an act of faith.

Whether you are beginning your faith-based investing journey or seeking to add an Israel allocation to a global investment strategy, Wise Money Israel is ready to walk alongside you as your trusted fiduciary advisor on the ground in Israel and in your corner every step of the way.

Ready to Start Your Biblical Investing Journey?

Connect with Wise Money Israel today to explore how to build a portfolio that honors your faith, supports Israel, and pursues a strategy centered on your investment objectives.

Start Your Biblical Investing Journey Today

IMPORTANT DISCLOSURES & RISK INFORMATION

This content is provided for educational and informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any securities. Investing in international markets, including the Israeli stock market, involves material risks, including but not limited to regulatory differences. All investment opportunities carry risk, including the potential loss of principal. Wise Money Israel does not guarantee any specific outcome, return, or profit. References to biblical principles and scriptures are provided for contextual and motivational purposes and do not constitute financial, legal, or tax advice. Individuals should consult with a qualified financial advisor, tax professional, and/or legal counsel before making any investment decisions. Diversification does not ensure a profit or protect against loss. © 2026 Wise Money Israel. All rights reserved.

The post Building a Biblically Responsible Portfolio: A Step-by-Step Guide to an Israel-Centered Faith-Based Investing appeared first on Wise Money Israel.

For faith-driven investors seeking to align their portfolios with biblical principles while pursuing disciplined, long-term investment outcomes, Israel offers a unique opportunity. Investing in Israeli companies allows participation in innovation, rebuilding, and stewardship in the land central to biblical history—while remaining mindful of market risk.

Even as Israel faced a seven front war, its stock market surged over the past two years (over 111% growth, or 150% in USD-terms).

Disclosure: of course index performance doesn’t represent the performance of any client account nor guarantee future results. USD-terms index comparisons, TA-125 vs. S&P 500: 1-year: 81% vs 18%, 5-year: 138% vs 82%, 10-year: 298% vs 259%. Indices are unmanaged, do not reflect the deduction of fees, expenses, or taxes, and that an investor cannot invest directly in an index. Investing involves risk, including the loss of principal. Exchange rate fluctuations can significantly reduce or eliminate investment returns for U.S. dollar-based investors. Index performance does not include the reinvestment of dividends unless otherwise stated. Past performance does not guarantee future success.

As we start 2026, understanding the key economic themes influencing Israel’s recovery—and working with advisors who understand these dynamics from within Israel—becomes essential for informed investment decision-making.

Despite recent challenges, Israel’s economy has demonstrated resilience across multiple economic cycles. Independent rating agencies have indicated expectations for gradual stabilization and recovery, reinforcing the importance of thoughtful, long-term positioning rather than short-term speculation. Standard and Poor’s (S&P) recently revised Israel’s credit outlook to stable, and affirmed its A- rating, expecting a 5% GDP growth rate in 2026 (U.S. at 2%).

A High-Level View of Key Growth Themes in Israel

Rather than focusing on forecasts or predictions, many investors consider structural themes shaping Israel’s economy as it rebuilds:

• Technology and innovation
• Renewable energy and environmental solutions
• Infrastructure, housing, and national development

These themes reflect areas where Israel has demonstrated long-standing expertise and where rebuilding efforts may create sustained economic activity over time.

Key Economic Themes in Israel’s Rebuilding Economy

 This discussion is thematic and educational in nature and does not constitute investment advice or a guarantee of future results.

1. Technology and High-Tech: Israel’s Innovation Ecosystem

Israel’s reputation as the “Startup Nation” reflects decades of investment in education, research, and technological problem-solving. Even during periods of geopolitical stress, Israel’s technology sector has remained deeply integrated into global markets.

Key areas of innovation include:

• Artificial intelligence applications across healthcare, security, and business systems
• Cybersecurity solutions addressing growing global digital risks
• Life sciences and biotechnology focused on improving quality of life
• Financial technology aimed at efficiency and accessibility

For biblical-minded investors, this sector reflects the application of creativity, wisdom, and human ingenuity to real-world challenges. As stability improves, continued research and development activity is expected to remain a meaningful contributor to Israel’s economy.

Advisors based in Israel are often able to assess these companies within their local business, regulatory, and cultural context—an important consideration when investing in international markets.

2. Renewable Energy and Environmental Technologies: Stewardship in Practice

The ancient principle of resource stewardship finds modern expression in Israel’s focus on renewable energy, water technology, and environmental innovation. Israel’s geographic conditions and resource constraints have driven decades of advancement in areas such as solar energy, desalination, and precision agriculture.

Examples of long-term environmental themes include:

• Solar power development and related infrastructure
• Water treatment, reuse, and efficiency technologies
• Energy storage and grid resilience solutions
• Agricultural water management and sustainability

Over the past six decades, Israel has emerged as a global leader in water technologies, pioneering innovations such as drip irrigation (which is now in used in over 100 countries), large-scale desalination, wastewater recycling (85%-90%, highest in the world), smart water networks, and desert agriculture. Driven by scarcity, Israel transformed necessity into expertise, exporting water solutions that are now used worldwide. These advances have influenced agriculture, urban infrastructure, and sustainability practices across multiple continents.

These areas support both economic development and responsible resource management. Investors interested in aligning capital with stewardship values may find this theme particularly compelling, while remaining aware that environmental and clean-tech investments can involve regulatory and technological risks.

3. Infrastructure and National Development: Building for the Future

Over the past two years, Israel’s north and south have borne the brunt of prolonged conflict, making rebuilding a national priority rather than a cyclical phase. Periods of rebuilding often involve significant investment in infrastructure, housing, transportation, and essential services. In Israel, these efforts play a critical role in economic normalization, employment, and long-term growth.

Infrastructure-related themes include:

• Transportation and logistics modernization
• Housing development and urban renewal
• Energy and utility systems
• Public-private partnerships supporting national development

From a biblical perspective, the rebuilding of Israeli communities in the Land reflects enduring principles of restoration. From an investment standpoint, exposure to infrastructure related activity can also contribute  diversification benefits within a broader portfolio.

Biblical Principles and Disciplined Investing

Biblical investing in Israel is not about speculation or certainty—it is about aligning capital with values while exercising prudence and humility.

Key principles often considered by faith-driven investors include:

• Stewardship and accountability
• Long-term thinking rather than short-term reaction
• Ethical conduct and respect for human dignity
• Diversification and risk awareness

Working with advisors who understand both financial markets and biblical values can help investors integrate faith considerations into a disciplined investment framework.

Working With Israel-Based Investment Advisors

Investing internationally involves currency exposure, geopolitical considerations, regulatory differences, and market complexity. Investment advisors who live and work in Israel bring local perspective that can complement global investment experience.

Such licensed advisor can help investors:

• Understand Israeli market structure and regulation
• Evaluate opportunities within broader portfolios
• Navigate periods of uncertainty with long-term discipline
• Maintain alignment between financial goals and personal values

Wise Money Israel offers investment management services grounded in direct familiarity with Israeli markets, language, and business culture, serving clients who value thoughtful, faith aligned investing informed by local insight. For those seeing to explore this approach further, a free introductory consultation is available through our website.

Wise Money Israel provides investment management services with on-the-ground Israeli market knowledge and language, serving clients who value thoughtful, faith-aligned investing.

Conclusion: Positioning Thoughtfully as Israel Rebuilds

As Israel continues its path of recovery and rebuilding, themes such as technology, environmental innovation, and infrastructure are likely to remain central to its economic development.

Investing in Israel is not simply a tactical financial decision—it is a long-term commitment that benefits from patience, discernment, and trusted guidance. By partnering with experienced, Israel-based advisors, investors can pursue their financial objectives while honoring biblical principles.

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The post Biblical Investing in Israel: 3 Growth Themes Shaping the Israeli Stock Market as Israel Rebuilds in 2026 appeared first on Wise Money Israel.