After days of relative calm, fear returned to the markets and trading screens in the country and world stock exchanges were painted bright red.
On Wednesday, the leading indices (NASDAQ, Dow Jones and S & P500) fell by 5% -4% and pulled the Tel Aviv Stock Exchange to sharp declines of about 2.5% -3% on Thursday in the leading indices. Against the background of the declines in the stock market, The dollar jumped against the shekel by about 1% and reached 3.39.
Investors' main concern is about technology stocks, which have been crashing since the beginning of the year.
The Nasdaq index has eroded its value by close to 30% since January, and this of course also affects Israeli technology companies. Some of them recorded dramatic declines of tens of percent, because they were traded a year ago at an inflated market value.
"tower of cards"
The combination of the exit from the corona crisis together with the process of raising interest rates in the world has caused a drop in some of the technology stocks, especially of those that entered the market in recent years and traded at particularly high multiples as early as a year ago.
Noam Mairovich, senior investment manager at Migdal Capital Markets, explains in a conversation with Israel Hayom that "this is a type of card tower. In a period of low interest rates in Israel and abroad, then naturally the price of money is very low and in such situations a lot of money comes To places in the world with an interest rate of 5% he would not have gotten there.
Some companies will survive and some companies will not.
Anyone who knows how to adapt to a situation where money is no longer so liquid will survive and succeed in this crisis.
But in the case of some of the blown up names, I have no shadow of a doubt that they will not be with us in 10 years. "
Mayrovich cites as an example the ICQ company, which was considered a dizzying success in the early 2000s and traded at a high value, but declined over the years from its greatness.
"I have no doubt it will happen this time as well. However, the basic economic assumption is that inflation that served as a fuel for the whole story will not continue to be as high as we have seen. It is something that is encouraging in this situation."
The implications for Israel
"It means not so good at the moment, but it's too early to be sad. All the companies that raised money, they have money. They pay salaries to employees, income tax, and everyone is happy in the meantime. At some point the money will run out and then the companies will have to show real results."
Mayrovich talks about companies like Monday, whose stock plunged 43 percent in the past year, Lemonade, which crashed 73 percent at the time, and others.
Mayrovich warns of the possible harm to the state's tax revenues as a result: "The State of Israel is very proud to be a high-tech state, but it must be taken into account that there are also risks in relying on high-tech. It will be expressed, so looking ahead, we must not be perfumed by this matter. "
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