Outgoing ISA head: Ignoring risks harms investor confidence

“The Israeli economy, which in the past decade has been an island of certainty in the global economic sea, no longer affords local and foreign investors the sense of security that characterized it up to now. Important analysts in overseas banks and financial institutions have expressed concern in recent weeks at the effects of political moves on the stability of the economy, and the downgrade of Israel’s credit rating outlook from positive to stable by rating agency Moody’s, which was announced last Friday, represents a warning sign that should be regarded seriously,” Anat Guetta, who is coming to the end of her five-year term as chairperson of the Israel Securities Authority, said today.

Guetta was due to have stepped down in January, but Minister of Finance Bezalel Smotrich decided to extend her term. No replacement has yet been appointed.

“Ignoring possible risks to the stability of corporate governance of the State of Israel undermines confidence in the Israeli market among investors and creates a perception of risk that makes Israel a less worthwhile place in which to invest at this time,” Guetta said. “The decision makers in the government must take bold action aimed at restoring confidence and stability to the Israeli economy.

“The announcement by Moody’s represents not just a warning sign but also an opportunity to reconsider our path and to take seriously the concerns of the investors who in the past decade have fueled the growth of the capital market and the growth of leading sectors of the technology industry to the point of world leadership.”

Alongside the concern, Guetta added, “Today I feel great pride at the work and achievements of all those who have worked at the Authority during my term. Together with the staff of the Authority we mapped the strengths of the Israeli market and acted vis-à-vis the world’s leading players to put the Israeli capital market on the map and to expand the number of players in the market and improve their quality. At the same time, we acted to come into line with regulation around the world and to abide by the accepted standards of developed capital markets; in the absence of legislation, we acted to implement international standards through voluntary adoption by the companies – a method customary around the world.

“The capital market is first and foremost an important source of credit and capital for the economy and a channel for saving and investment for the public. To ensure the optimal working of these two functions, in the past few years we have strengthened the infrastructure on the basis of which the capital market works. We have turned the Tel Aviv Stock Exchange into a business entity in order to ensure that the interest of investors will be uppermost in its considerations. As with anything new, yes, there are birth pangs – upgrading is not just a matter of growing revenue, but of a deep internal change in the way of operating and implementation of international standards in order to contend with growing competition. Only thus will we be able to ensure a good infrastructure for the public and the economy,” Guetta said.

Published by Globes, Israel business news – en.globes.co.il – on April 17, 2023.

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