Shares on the Tel Aviv Stock Exchange fell sharply Sunday morning as traders reacted with a two-day lag to the implications of the British vote to leave the European Union.
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The TASE used its circuit-breaker mechanism to briefly delay trade at the opening, but the benchmark TA-25 index still opened down 3%. It pared back some of those early losses and late morning local time it was down 2.8% at 1,392.77 points.
But bank shares, which suffered the brunt of Friday’s global rout, were down 3.4%. Shares of Bank Hapolaim, Israel’s biggest, were down 3.5% at 19.22 shekels ($4.95). Of the stock exchange’s top 100 represented in the TA-100 index, only one, the U.S. biotech company Mannkind, was higher.
The TASE was closed Friday when other global stock markets lost about $2 trillion in value after Brexit vote, while sterling suffered a record one-day plunge to a 31-year low and money poured into safe-haven gold and government bonds.
The move blindsided investors, who had expected Britain to vote to stay in the EU, and sparked sharp repricing across asset classes. Mainland European equity markets took the brunt of selling as investors feared the vote could destabilize the 28-member bloc by prompting more referendums.
Finance Minister Moshe Kahlon sought to assure Israelis that the economy would be able to weather the crisis, citing last week’s news of record low unemployment as well as the government small budget deficit and low debt levels relative to other developed countries.
“We have a strong and stable economy and are prepared to cope with every scenario and challenge,” he said, adding, however, that the treasury had set up a situation room to monitor the situation.
The quasi-governmental Export Institute said Israel’s exports to Britain, the country’s second-biggest market, were unlikely to be hurt because they are mainly for products with inelastic demands like medicine. But, it warned, trade in general would be hurt by weaker European economies.
“The weakness of the pound and the euro, as well as a certain slowdown in growth in Britain and the countries that trade with it, will hurt Israeli exports to Europe,” said Ofer Klein, chief economist at Harel Insurance & Finance. He said however, that weak economies would lower the price of oil.
Reuters contributed to this report.