Smotrich Boasts: Israeli Stock Market Doubled Since War Began, Outperforming US

Reflecto News | Breaking News | Israel Economy

JERUSALEM — Israeli Finance Minister Bezalel Smotrich has issued a triumphant statement on the state of Israel’s economy, declaring that the Tel Aviv Stock Exchange’s main indices have more than doubled since the outbreak of the recent war — dramatically outperforming American and global markets .

Smotrich’s claim, if accurate, would fly in the face of conventional expectations that armed conflict leads to a sell-off in local equities.

“The Israeli stock market, in its main indices, has risen by more than 100% since before the war. There is no country like this in the world. We even outperformed the American markets. In fact, Israel is now able to raise debt more cheaply than the United States government in its own market.” — Bezalel Smotrich, Minister of Finance of Israel

📈 Stock Market Performance

Smotrich’s “doubled” claim refers to the performance of two key Israeli indices:

• The TA-125 Index, which tracks the 125 largest companies listed on the TASE, and the TA-90 Index, which tracks the 90 largest companies excluding the financial, real estate, and energy sectors.

Since the Hamas attack on October 7, 2023, the TA-125 default index has surged 102%, compared to a rise of just 51% for the S&P 500 over the same period. Since the war with Iran began on February 28, the TA-125 has risen 18%, versus a 5% rise in the S&P 500.

💰 Israeli Bonds Outperform US (At Least on Yield)

Smotrich’s most provocative claim — that Israel can now “raise debt more cheaply than the United States government” — refers to the yield spread between Israeli and U.S. 10-year bonds.

On May 3, 2026, the yield on the Israeli 10-year bond fell to 5.26%, while the U.S. 10-year Treasury yielded 5.04%. Generally, the US Treasury is considered the ultimate “risk-free” asset, and all other countries must pay a premium (higher yield) to borrow. But Israel — a tiny country of 9 million people — temporarily had a lower yield than the United States.

This inversion is a result of several factors:

• U.S. economic uncertainty (growth fears, deficit spending, debt ceiling battles)
• Israeli fiscal credibility (war has increased deficit, but the shekel has remained stable; inflation under control)
• The “Start-Up Nation” factor (the Tel Aviv index is dominated by tech, which has boomed)

Nevertheless, Israel’s credit rating has been downgraded twice since the war began (S&P and Moody’s), and the deficit has surged. Smotrich’s “cheaper than the US” may be true for now, but it is not a permanent state.

⚠️ The Catch

Smotrich left out the fact that the Israeli shekel has depreciated 15% against the US dollar since the war began. The Tel Aviv index rose 100% in local currency terms, but when converted into dollars (the actual currency in which foreign investors get paid), the increase is closer to 40% — still impressive, but not “doubled.” Moreover, the war has caused significant collateral damage to the Israeli economy:

• Moody’s cut Israel’s credit rating in September 2025 from A2 to A3, then to A3 negative outlook in April 2026 , citing the war with Iran.
• S&P downgraded Israel from AA- to A+ in February 2025, and again to A in April 2026 .
• Fitch removed Israel from “Rating Watch Negative” in March 2026 but maintained an A+ rating with a stable outlook .

Smotrich, who previously served as the chairman of the Knesset Finance Committee, is a far‑right politician who has called for the annexation of the West Bank. His bullish claims about the economy are aimed at convincing foreign investors that Israel is a safe bet and at reassuring Israeli citizens that the government is managing the war competently.

📋 Key Takeaways

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