February has proven to be another fruitful month for pension and provident funds, building on the solid returns seen in January.

This notable performance can be attributed to robust price increases in both Israeli and global stock markets. The surge in returns presents an opportunity to revisit forecasts published at the end of 2023, particularly concerning leading indices. Estimates from nine prominent investment houses suggested a 12% increase for the Tel Aviv-35 index and a more modest 6% rise for the S&P 500.

Although only two months into the year, the performance of these indices has exceeded expectations. The Tel Aviv-35 index surged by 4.4% in January alone and continued its upward trajectory in February, marking a 6.3% increase and reaching record levels. Similarly, the S&P 500 saw a 6.8% rise in the first two months, surpassing forecasts.

Analysts remain optimistic about the local market’s growth potential, emphasizing favorable pricing conditions after a period of stagnation. Eran Goldring, CIO at Analyst Provident Funds, notes the potential for a 20% jump in the Tel Aviv-35 index, citing factors such as improved security conditions and lowered interest rates.

Experts also highlight opportunities within the broader TA-125 index, which has risen by 7.5% since the start of February. Companies like Teva and Elbit Systems are expected to benefit from shifting market dynamics, while renewable energy firms like Enlight and Energix show promise for future growth.

Aviram Neah, Head of Equities at Meitav Long Term Savings, underscores the importance of evaluating the Israeli economy’s stability and its impact on stock indices. He emphasizes the differences between the TA-125 and the S&P 500, cautioning against direct comparisons due to variations in sector composition.

Goldring asserts that the current market upturn is grounded in improved profitability rather than speculative bubbles. He highlights the rationality of investor behaviour, citing reasonable leverage levels and subdued multipliers compared to previous market cycles.

In conclusion, February’s robust performance sets a positive tone for pension and provident funds, signalling potential for continued growth. However, analysts advise a nuanced approach, emphasizing the importance of evaluating market dynamics and maintaining diversified portfolios to navigate evolving economic landscapes effectively.