Meitav Investment House head: Investors scared off by legislative blitz

Owner of the Meitav Investment House, claims that investors are frightened by the legislative blitz and are transferring more money abroad due to the continuation of the judicial reform legislation.

Israeli stock market traders work at their office in the Meitav investment house in Tel Aviv (photo credit: AFP PHOTO)
Israeli stock market traders work at their office in the Meitav investment house in Tel Aviv
(photo credit: AFP PHOTO)

Zvi Stepak, chair and owner of Meitav, the largest investment house in Israel which manages funds worth NIS 220 billion, said that politicians are pushing new legislation because of power intoxication and euphoria. They understand that time is running out and are trying to shock everyone, which is a delusional process. 

In response to the question of how the judicial reforms are felt on the ground, he added that with provident funds, the demand for active or passive foreign routes has increased. For mutual funds, a shift from stocks to financial funds, mainly in dollars, is noticeable. 

Stepak stated that in portfolio management, there's a reduction in the percentage of shares. Clients are interested in opening accounts abroad. Very affluent investors from the hi-tech and biomed worlds who have portfolios with Meitav of about NIS 100 million are transferring funds abroad. 

Stepak clarifies that he personally wouldn't act this way: "I don't have accounts abroad and I haven't seen any benefit to opening accounts there, but people are afraid and don't know what will happen."  

He also doesn't see a possibility that a politician will impose a ban on taking foreign currency abroad, but after the reform we'll see. 

 New Israeli Shekel banknotes and coins are seen in this picture illustration taken November 9, 2021.  (credit: REUTERS/NIR ELIAS)
New Israeli Shekel banknotes and coins are seen in this picture illustration taken November 9, 2021. (credit: REUTERS/NIR ELIAS)

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He recommends not panicking as it won't get there. The barometer for people's feelings is the behavior of the dollar and that's not a good sign. When Amir Yaron, Governor of the Bank of Israel, raised the interest rate by half a percent, the shekel weakened.

The management of the Israel Investment Houses Association, headed by Ilan Raviv, CEO of Meitav, sent a letter last month to Justice Minister Yariv Levin and opposition leader Yair Lapid calling for talks.

Stepak added that from the moment the justice minister's plan was presented, he expected it wouldn't end well. He's seriously involved with this issue, went to the demonstrations, and spoke at a demonstration in Herzliya. 

He added that if the reform is implemented as is, it will be very bad. Israel will become a different country. He studied in depth what happened in Hungary and what happened following the appointment of judges on behalf of and the elimination of the media. It ended very badly, and if the same happens here, it's worrying.

Regarding his assessment of the state of the stock market in the coming year, he added that he doesn't foresee good things. 

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If a reasonable compromise is reached, he explained, things can change for the better in a second. But as long as the direction is a legislative blitz with problematic clauses, there's a serious problem here. It doesn't entice people to invest in the stock market.