Subscribe to Print Edition | Thu., January 08, 2009 Tevet 12, 5769 | | Israel Time: 02:02 (EST+7)   Back to Homepage web haaretz.com Haaretz Toolbar Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Haaretz Magazine Business Real Estate Joy of Giving Travel Week's End Anglo File

Hard look / War is hell, so why are stocks rising? By Ami Ginsburg Since the war down south began, Israeli stocks have been rising steadily. Could war be good for stocks? No, nor is it good for the economy. Wars cost money, from financing the army to repairing the damage in the aftermath, and added to that are lost productivity and collapsing tourism. War also makes Israel a riskier prospect for investors, though so far local asset prices haven't fallen (as they should have), they've risen. Advertisement Why? Several forces act on the exchange, and it's hard to know which is stronger at any given time. War is a tremendous force, but so are developments on foreign markets. Since Operation Cast Lead began, the Dow Jones has gained 6%, Frankfurt's DAX index has risen 8.5% and Tokyo stocks have gained 6%. Are events in world markets more important to Tel Aviv investors than events in Gaza? Generally, yes. Stock market trends depend on long-term developments, on forecasts for five and 15 years down the line. So far the Gaza war is perceived as a pinpoint event that will probably end soon. If it drags out, it will affect the market more. That's not how it happened in 2006: When the Second Lebanon War began, the stock market was near its all-time high. It had room to fall. This time, the Tel Aviv Stock Exchange entered the battle at a very low ebb. Why are foreign markets rising? Is the crisis over? No, it isn't, and there doesn't seem to be one single reason for the rally. The naked economic statistics show retreat on almost every front. In the U.S. car sales are down and housing prices continue to shrink. Industrial production is contracting. The rally is probably psychological in origin. People feel the situation is stabilizing. Investors are regaining some confidence, especially as many stocks overshot on their way down and confer toothsome opportunity. Also, central banks around the world have been lowering interest rates. One upshot is that people aren't getting anything on bank deposits. The money just sits there, diminishing in value with inflation. Investors need to put the money somewhere else, which is precisely what the central banks had in mind to restart the markets, and to prevent everybody from sheltering in government bonds. Granted, the rate cuts started weeks ago, but it takes people time to digest what they mean. By the way, when Discount Bank chairman Shlomo Zohar said that anybody in "government bonds" would lose their pants, he meant "U.S. government bonds." Israeli government bonds are indeed safe, if you keep them until they mature. If you mean to buy bonds and then sell them before they mature, you risk losing money because you may have bought them relatively dearly, and may wind up selling them during a downtick in the market. Government bonds have been fairly volatile of late, proving the point. Bookmark to del.icio.us   Humanitarian initiative There is a way for Israel to prove it is committed to universal moral values. Top Targets An Islamist site is compiling a list of U.K. Jews to target over Gaza op.

Read & React Bradley Burston / A Jew's prayer for the children of Gaza Responses: 52 IDF: Shelled UN school in Gaza used as hideout by Hamas Responses: 100 ANALYSIS / Using aggressive tactics in Gaza to save soldiers' lives Responses: 23 Venezuela's Chavez: Gaza operation is a Palestinian 'holocaust' Responses: 26 Amira Hass: Lucky my parents aren't alive to see Israel bomb Gaza Responses: 40 More Headlines 23:29 Israel bombs south Gaza tunnels, tells local residents to flee 01:09 Barak: If cease-fire deal doesn't meet Israel's demands, Gaza operation will continue 21:55 Clashes resume in Gaza City after 3-hour humanitarian truce 22:58 Rice: Gaza truce needed, but must not allow return to 'status quo ante' 18:30 Defense sources: Even if Hamas agrees to truce, its armed wing may resist 23:37 25 Gaza rockets strike Negev over course of Wednesday 21:27 Obama vows to 'engage immediately' on Mideast once inaugurated 12:57 A Jew's prayer for the children of Gaza 18:20 Get up to the minute coverage of the warfare in Gaza directly to your email 11:35 ANALYSIS / Israel must double, triple, quadruple its medical aid to Gaza 14:34 Report: Islamist site compiling list of U.K. Jews to target over Gaza op 20:40 In battle for public opinion, IDF Web site puts female face forward 16:14 Israel defers vote on expanding Gaza ground op amid growing truce bids 22:00 Joe the Plumber named conservative Web site's war correspondent in Israel 14:53 Nasrallah: Hezbollah will make Lebanon war look like 'a walk in the park' 01:51 German court rules Nazi hit man unfit to stand trial 01:24 IDF reserve forces receive fictitious calls for duty in Gaza 21:35 WATCH: Former Israeli Ambassador to the U.S. Zalman Shoval on Gaza conflict 21:33 U.S. rabbi raises $100,000 to buy care packages for IDF troops in Gaza 14:19 Amira Hass / 86 hours after Gaza home shelled, family still lacks medical aid Previous Editions Select Day 07 jan 06 jan 05 jan 04 jan 02 jan 01 jan 31 dec 30 dec 29 dec 28 dec 26 dec 25 dec

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