The Tel Aviv Stock Exchange (TASE) concluded another bullish week, with the TA-35 index firmly established at historic highs as global markets price in Israel’s post-war recovery. Despite the ongoing regional complexities, the local equity market has transitioned from a period of high risk-premium to a “magnet” for foreign investment, outperforming major global benchmarks.

Bullish Momentum and Record Performance

During the week of December 15–21, 2025, the TA-35 demonstrated significant strength, closing at 3,661.68 points, a +1.83% increase over the last five trading days. This rally is part of a broader 2025 trend where the index has soared more than 50%, fueled by a unique “rally ’round the flag” effect and the cooling of domestic security risks. Technical indicators remain overwhelmingly positive, with the Relative Strength Index (RSI) at 64.3 and the MACD signaling continued buying pressure as the market ignores previous bearish structures.

The Return of Foreign Capital

The defining characteristic of this week’s market activity is the surge in foreign institutional investment, which now accounts for approximately 11% of the TA-35’s total market value. Reports from the TASE indicate that North American and European investors poured billions into Israeli assets this year, with passive investment through ETFs managed by firms like BlackRock and Vanguard leading the way. This influx signifies a major vote of confidence in the resilience of Israeli blue-chip companies, particularly in the banking and technology sectors, which have led the index’s charge.

Macroeconomic Resilience and Global Ranking

Israel’s climb to the third spot in The Economist’s 2025 economic rankings has provided a fundamental backdrop for the current stock market euphoria. With inflation slowing to 2.4% in November—well within the government’s target range—and the Shekel showing stability against the Dollar (trading around 3.21), the macroeconomic environment has become increasingly supportive of equity valuations. This stability is particularly notable given the ballooning war costs and debt burden earlier in the year, which the market has now largely discounted in favor of growth prospects and industrial recovery.

Looking ahead, the market will closely monitor the sustainability of these record highs as we approach the end of the fiscal year. While the outlook remains optimistic, investors should remain vigilant regarding potential “overbought” signals in technical charts and the evolving security situation in the north. The primary opportunity lies in the continued revaluation of defense and construction stocks, while the chief risk remains any unexpected shift in the Bank of Israel’s interest rate path or a cooling of the currently aggressive foreign capital inflows.