BlackRock Israel head: "For 2025, we anticipate high inflation and macroeconomic volatility"
BlackRock Israel head: "For 2025, we anticipate high inflation and macroeconomic volatility"
Anath Levin, BlackRock Israel Head, warned of stubborn inflation and high government debt in 2025. Matan Shitrit, Phoenix's chief economist: "The market in Israel is an opportunity in relation to the world. The pager attack changed the picture."
"The Israeli market presents an opportunity compared to global markets. The 'pager attack' has shifted the dynamic," said Matan Shitrit, chief economist of The Phoenix, speaking at Calcalist's 2025 Forecasts Conference held in collaboration with Bank Hapoalim and The Phoenix Group.
Shitrit made these remarks during a panel moderated by Calcalist journalist Yarden Rozanski, which also featured BlackRock Israel country head Anath Levin, Innovation Authority Chairman Alon Stopel, and Gong co-founder and CEO Amit Bendov.
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Forecasting Conference Panel: (from right) Amit Bendov, Matan Shitrit, Anath Levin, Alon Stopel
(PhotoL Gil Nechushtan)
Shitrit elaborated, "The Israeli market is intriguing. Most of the gains in 2024 occurred in the final three months, and looking ahead, this trend might persist. Is the Israeli market still undervalued relative to global markets? The answer is yes. When assessing the risk-reward ratio, Israel offers significant potential compared to the world."
Rozanski asked, "Matan, looking ahead to 2025 after such a turbulent year, is Israel an investment opportunity today?"
Shitrit responded: "In recent months, low earnings multiples have indicated that the Israeli market is undervalued compared to global markets, so there’s definitely an opportunity here. However, Israel’s market structure—dominated by banks, insurance companies, and real estate—makes it more complex than global counterparts. Therefore, earnings multiples alone cannot tell the whole story."
When asked about the trend of Israelis investing heavily in the S&P 500, Shitrit noted: "Investing is wise, but risks must be considered. Over the past two years, we’ve seen an influx into the S&P 500, but its recent stellar performance will pose challenges for the index in 2025. Many investors might overlook the risks facing the U.S. economy. In 2025, challenges like Trump’s return to the White House and the Fed’s interest rate policy will come into play.
"When I hear investors say they are entering the S&P 500 for a year or two, there’s a considerable risk of losses. Long-term, it’s a compelling index with a proven historical record for passive investors. However, given some of the reduced risks in the Israeli market, there’s an opportunity to consider reallocating exposure to Israel, even at the expense of the S&P 500."
Rozanski shifted the discussion to global risks, asking Anath Levin about the most significant challenges facing markets.
Levin said: "Listening to Powell’s remarks two weeks ago, it’s clear that the American consumer and labor market remain strong, but global inflation remains stubborn. As we enter 2025, we face unpredictability around trade restrictions, superpower relations, and other geopolitical scenarios. These uncertainties make forecasting inflation—which directly impacts markets—extremely difficult.
"One major challenge is the high debt levels of governments worldwide, including the U.S., which make us cautious about long-term bonds. Additionally, the rapid advancements in AI require substantial investment by mega-companies. This transformative technology hasn’t yet reached full adoption but will significantly impact markets and economies in the coming years. For 2025, we anticipate high inflation, government debt pressures, and macroeconomic volatility."
Amit Bendov, co-founder and CEO of Gong, was asked if Israel has missed the boat in the AI revolution.
"Absolutely not," Bendov asserted. "Israel has not missed the boat. By next year’s conference, we’ll see many Israeli companies excelling in AI. This technology is arguably the most significant event in human history—bigger than the industrial revolution—and it will shape our world for centuries. In the coming years, numerous Israeli companies will thrive in this domain. We’re not lagging behind."
Rozanski directed the conversation to Alon Stopel, asking how the Innovation Authority is addressing the gaps in support for startups outside cyber and fintech, which dominate Israel’s high-tech sector.
Stopel responded: "We’re seeing a recovery trend in high-tech that’s encouraging. By 2024, we’ll reach 2019 performance levels. As an authority, we’re channeling resources into areas with less capital availability, like medical devices and early-stage AI startups. For example, we’ve established a dedicated startup fund focused on these sectors."
When asked about building large-scale companies in Israel, Bendov highlighted the potential: "It’s entirely possible, and we’re seeing third-generation entrepreneurs aiming for massive success. They have the experience of previous exits and are now setting their sights higher. Companies like Wiz are proof of this potential, and over ten companies are already on this trajectory. With AI enabling faster and more efficient development, there’s no reason Israel can’t produce much larger companies."
Finally, Shitrit was asked whether Trump’s return to the White House is good news for global markets and high-tech.
"Based on his previous term, the answer is yes for markets. However, there’s considerable uncertainty around issues like tariffs and immigration. This uncertainty has already influenced the Fed’s latest interest rate decision. Questions about future tariffs and wage inflation driven by immigration policies add to the challenges. Trump’s return will undoubtedly bring volatility in the coming year," Shitrit explained.
The panel concluded with Levin discussing BlackRock’s dramatic growth in alternative assets: "The world is in the midst of a transformation, not a traditional business cycle. Megatrends like AI, energy investments, and high government debt require new approaches. The traditional 60%-40% stock-bond model is outdated. The future lies in combining tradable and non-tradable assets, building flows, and taking calculated risks. Those who don’t adapt will fall behind."
