Leading US financial institute JPMorgan has warned of a growing risk of investing in the Zionist entity due to the new Israeli government’s far-reaching plans for overhauling the judicial system and increased ‘geopolitical tensions’.
“Israel’s local markets have seen a flare-up in idiosyncratic risk as increased geopolitical tensions were added to investor concerns over plans for judicial reforms,” the report, released on Friday, read.
“The judicial reform has raised concerns regarding institutional strength and the investment climate in the country… Any material deterioration in the institutional strength can have an impact on investment flows, however, the scale and timing of such is difficult to judge.”
The internal memo report also referenced concerns surrounding the judicial reform’s potential harm to Israel’s sovereign credit rating, noting that “There may also be downside risk to Israel’s sovereign credit rating but we would expect the market impact of that to be limited.”
JP Morgan compared Israel’s heightened risk to investors with a similar instance that occurred in Poland. Following the latter’s recent judicial reforms ultimately impacted its attractiveness to investors; JP Morgan has suggested that Israeli reputation among foreign investors may follow suit.
“The judicial reforms can have medium-term investment and growth implications that are hard to quantify. We draw comparisons with Poland’s judicial reforms following his election victory in 2015 which appear to have led to some lags in FDI flows, stated the report, reiterating that “Credit rating downgrade is also a risk.”
The report came days after Prime Minister Benjamin Netanyahu pointed to both JPMorgan and fellow US banking giant Goldman Sachs as evidence that the judicial proposals were not chasing away potential investors.
Source: Israeli media