Israel and Iran stock markets at all-time highs

Published: Friday, June 20, 2025 at 11:14 am

Middle Eastern Markets Defy War's Expected Downturn

The conventional wisdom that war negatively impacts stock markets is being challenged in the Middle East. Following an escalation of hostilities, including an Iranian missile strike on the Tel Aviv Stock Exchange, both Israeli and Iranian markets have demonstrated surprising resilience.

On June 19th, the Tel Aviv Stock Exchange (TASE) building was targeted. Despite this, the TASE's own shares closed up approximately 1.67%, reaching around 6,161 ILA. This performance pushed the year-to-date gains to over 45%. Broader indices also showed strength, with the Tel Aviv-35 reaching a 52-week high and the Tel Aviv-125 index peaking during the trading session. This suggests investors are betting on the market's ability to withstand the conflict.

Across the border, the Tehran Stock Exchange (TEDPIX) also remained near its all-time highs. By mid-June, the index had soared approximately 46% year-over-year. However, the drivers behind this growth differ significantly from those in Israel. The gains in Tehran are largely attributed to aggressive domestic monetary expansion, a closed economy, and capital flight due to currency devaluation, rather than fundamental economic strength.

In Israel, the market's performance is partly fueled by sector rotation, with defense contractors, cybersecurity firms, and commodity-linked stocks experiencing outperformance. Government support for capital markets and expectations of a swift but contained response have also contributed to investor confidence. In contrast, the high nominal returns in Tehran are often a reflection of the rial's decline, rather than genuine economic prosperity.

BNN's Perspective: The contrasting market performances highlight the complex interplay of geopolitical events and economic factors. While Israel's market strength may reflect genuine resilience and strategic investment, Iran's gains appear to be driven by less sustainable factors. This situation underscores the need for investors to carefully analyze the underlying economic realities when assessing market trends in conflict zones.

Keywords: Israel, Iran, stock market, Tel Aviv Stock Exchange, Tehran Stock Exchange, TASE, TEDPIX, market performance, war, conflict, investment, economy, defense, cybersecurity, currency devaluation, Middle East.

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