On video: The IDF attacked infrastructures of the Syrian army in which the terrorist organization Hizballah operated 03.12.24/doc
"The Israeli economy was hurt. We saw it in the growth figures, especially at the beginning of the fighting when everyone was drafted. But we also see that historically, Israel's economy knows how to be flexible, and to deal with these types of situations and to recover again." So says Erez Magdali, director of the investment division at Migdal Insurance and Finance. According to him, "We have seen this in the past after military operations, and it is true that this is a much broader event, so the fear was greater at the beginning, but we still see a gradual return of a great deal of activity in the economy, including in the consumption of the citizens."
Magdali is responsible, among other things, for the area of non-marketable investments of the Magdal Group, which include investments in real estate, infrastructure, technology, private credit as well as investment funds in Israel and abroad. "There is a very challenging deal here with an increase in the government's recruitment needs to finance the event of the fighting, and also the future impact it will have on the budget," he adds, "if in recent decades we have seen a decrease in the defense budget when measured as a percentage of GDP, there will probably be an increase here fixed in the medium term as a type of constraint. The economy will have to deal with this constraint, and we see that this is already reflected in an increase in Israel's risk premium."
Looking at long-term investments, Magadli emphasizes that "the talents that exist in Israel and the charm of Israeli high-tech will continue to pull the economy forward, amid great uncertainty , mainly due to the security situation in the north, which is still unclear how it will end, if at all. Therefore, only after we see a decrease in uncertainty, we will also see reinvestments in Israel on a larger scale.
" . The challenge is to generate the momentum of renewed growth, which in the end everyone will benefit from, because without the renewal of growth there could be damage to the standard of living of the citizens. We do believe that the economy in Israel has good and strong foundations, but it is facing a difficult event from an economic point of view, and the uncertainty in the north clouds the market and the business situation.
" Recruited." He explains, "We of course support them and their families. At the same time, we thought about how Migdal could, from its place in Israeli society, support the people in the south in this difficult reality that was imposed on them. One of the big decisions we made was to adopt the city of Sderot, with a financial contribution of NIS 10 million along with close support from the municipality and local institutions.
"Although we experienced the events of October 7 with shock and astonishment like every Israeli, we quickly prepared to continue providing service to our customers, as one of Migdal's central hubs is in Ashkelon, as a central part of continuing to support policyholders and investors, and at the same time to support our reserve personnel, like all Jewish nation".
towers. "We believe that there are areas here that will continue to be strong going forward"/Nicola Westefel
"Increasing risks with the possibility of opportunities"
Magdali emphasizes that Migdal sees itself as a financial entity with a long-term vision and only recently made several important transactions, including the purchase of 10% of the shares of the nursing care chain Amal and Beyond, alongside other investments such as the purchase of shares in Cellcom together with the Fimi Fund. "We are first of all a local body, we know a great many of the projects here, the investments in Israel, and we see the importance of continuing to invest in times like this and in general, both out of Zionism and out of a perception and understanding that there is a lot of potential and strength in the Israeli economy."
Migdal has a very developed activity in the field of real estate and infrastructure in Israel. It manages real estate assets in Israel to the extent of over NIS 15 billion. "We constantly continue to operate in this area and make investments in infrastructure such as roads, housing and logistics centers. We believe that this is the time to invest with a view to the years ahead.
"We have invested in the financing of rental housing projects, in infrastructure, logistics assets and various companies," he says. "We do We see ourselves as a body that understands that there is an increase in uncertainty, an increase in risks, but we also see the value that the Israeli economy has in looking ahead, and as a body that thinks long term we want to take these opportunities."
Magdali explains that Migdal sees itself as a central company in the Israeli economy with great responsibility , first and foremost towards its customers. "We manage investment portfolios for about 2 and a half million customers," he emphasizes, "about 350 billion shekels of savings of the Israeli public. We manage a very diverse portfolio that is spread between Israel and abroad, between private non-tradables and the stock market. The diversification of the portfolio and its characteristics helped us deal with this event financially. As I mentioned, "
uncertainty also creates opportunities for entities that think long-term. We believe that there are areas here that will continue to be strong going forward, such as procurement of logistics centers. We continue to invest in Israel, of course we are constantly analyzing the situation, examining where the risks have increased and what will happen to the interest rate, but we are in the mode of continuing to operate here, and expanding into new areas.
Looking ahead, "We still think there will be uncertainty here, and therefore we are acting gradually," emphasizes Magadli, "We don't know when this event will end, therefore even in buying properties in Israel we are acting gradually, based on an analysis of what we think is worthwhile, But we can point out that we have seen some kind of maturing of the Israeli savers.
"I think that the Corona period, which had sharp falls and a very quick recovery, gave some kind of market education here. Today people understand more that there are fluctuations, that there are unusual events, but it is not right to act recklessly during this period. We have not seen unusual requests for changes in savings routes, or even in the mutual funds, which is more liquid money. The pension portfolios in Israel are very dispersed between investments in Israel and abroad. In fact, over 50% of the assets today are located abroad, and this gives dispersion and the ability to our system to deal with such events."
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"The world is worried, but Israel has good basic data"
Magdali says that after the terrorist attack by Hamas and the massacre events of October 7, the company received calls and messages of sympathy and support from many bodies and institutions that they work with around the world. "This is really seen as an unusual event for them as well," he explains, "Our relationship with the world is very important and critical to the economy, and it will continue to be so.
"We do see a continuation of the international activity, but it is clear that they are asking more questions. Most of them feel the increase in uncertainty, both the international companies and the investors who have been working with us for a long time, even though they have already experienced similar situations, even if not to this extent. It can be said that Israel's reputation helps here, that is, the reputation of Israeli companies, of Israeli high-tech. The fact that there is a very strong base here, which they already know, they know that it works well, so there is a good chance that it will return to the high level after the war is over.
"There is an appreciation on their part for the durability of Israeli businesses and companies, but still the way things look from the outside has an effect, and there is caution in everything that concerns Israel. There is a little more caution on the part of foreign investors, I think they are waiting for the picture to become clearer. Looking ahead, there is room for optimism, the basic data Ours as a country are good, but we will be dealing with the consequences of the war for a very long time. The State of Israel will have to be more careful about its economic management looking ahead, because the tactical security needs will be high.
"Our ability as a country to manage a budget responsibly and maintain the credit rating at the current level is critical for To attract investments to Israel. There are many strengths of the economy here, but we are also facing challenges that we have not experienced in years. Therefore, forward-looking management will be critical and more important than ever."
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