JPMorgan, a global leader in financial service, has warned of an increasing danger of investing in Israel, citing the new government’s recent revamping of the judicial system.
“Israel’s local markets have seen a flareup in idiosyncratic risk, as increased geopolitical tensions were added to investor concerns over plans for judicial reforms,” stated the memo. “The judicial reform has raised concerns regarding institutional strength and the investment climate in the country.”
The reforms would tighten political control over judicial appointments and limit the Supreme Court’s ability to overrule government rulings or Knesset-approved laws.
Leading Israeli economists have warned that the proposed reforms will do “long-term harm” to the Israeli economy.
The internal memo was released on Friday and was first reported by Israel’s Channel 12.
Incidentally, Israeli prime minister Benjamin Netanyahu had earlier cited JPMorgan and Goldman Sachs as supportive of his reform.
“They say that the judicial reform will keep investors away. But two of the biggest and most influential investment banks, JPMorgan and Goldman Sachs, say the exact opposite,” Netanyahu tweeted Sunday, with a screen grab of a JPMorgan trading desk note calling protests in the country “largely noise”.
Friday’s memo, however, noted the “significant local protests” in Israel against the overhaul. In addition, it said investors should consider prolonged “geopolitical hostilities” stemming from the “less centrist tilt of the current [Israeli] government”.
Earlier, Israel’s economics minister downplayed concerns that the new right-wing coalition’s judicial reform proposals would hurt the economy and cause brain, Reuters reported.
In separate comments later to Reuters, Barkat rejected concerns that high-tech workers might leave Israel, saying the country would remain a beacon for talent and innovation.
“Look at the missions that come here from all over the world. They’re here because they understand that the talent is here. It’s created in the army, it’s created in our DNA. And there’s no doubt in my mind that it will continue scaling and growing,” Barkat said.
“The majority (of people who come to do business here) don’t care or don’t look into other issues that we have – we’re a democracy, we’re a very strong democracy,” he added.