"The election of Trump as president of the US is positive for the local stock market, because of the president-elect's support for lowering taxes, raising investment in infrastructure, and imposing duty on imports. This is positive mainly for small and medium-size companies and companies active in the local market that will benefit from the expected strengthening of the US economy. On the other hand, large global companies are liable to be adversely affected because of a stronger dollar," investment house Halman-Aldubi says in its weekly market review.
Halman-Aldubi adds that "the risk in the bond market has risen significantly, because of the likelihood of higher inflation in the US and Trump's statements about the need to replace the chair of the Federal Reserve this year."
The investment house also notes that volatility has risen considerably both in the equities market and in the bond market, and it estimates that this situation will continue in the coming weeks, with trading on capital markets in Israel and globally continuing to be in the shadow of the expansionary monetary policy adopted by many central banks and of the waiting period before the change of administration in the US.
Halman-Aldubi recommends raising exposure to Israeli stocks and reducing overseas exposure, in the light of pricing gaps between the Israeli market and the main markets overseas, and the expectation of high profitability and good performance by local companies in comparison with overseas companies.
Published by Globes [online], Israel business news - www.globes-online.com - on November 13, 2016
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