Amid nearly two years of ongoing conflict, Israel’s TA-125 index has soared to an all-time high, with the shekel delivering its best performance in over two decades. Booming banking, defense, and tech sectors are fueling unexpected investor confidence in Israel’s economic resilience.
Despite being entrenched in a prolonged conflict for nearly two years, Israel’s financial markets are defying global caution and reaching unprecedented heights. The Tel Aviv Stock Exchange has become a surprising outlier, with the TA-125 index climbing to a historic peak of 3,138 points—marking an impressive 22% gain since the beginning of the year. At the same time, the Israeli shekel has posted its strongest performance in more than two decades, standing in sharp contrast to the cautious trends prevailing across European and American markets.
According to Bloomberg, the relative calm and upward momentum in Tel Aviv reflects a surprising surge of investor confidence in Israel’s economy, even amid geopolitical volatility.
Three powerhouse sectors—banking, defense, and technology—are driving this exceptional growth. Israeli banks are leading the charge, with shares of the top five institutions jumping by 30%, powered by interest rates hovering around 4.5%. These elevated rates have significantly boosted bank margins and attracted dividend-seeking investors. Bank Hapoalim, one of Israel’s largest financial institutions, recently reported a record-breaking profit of 2.7 billion shekels.
Meanwhile, the defense industry has experienced a staggering 130% growth over the past year. Defense exports are shattering records, bolstered by Israel’s combat-tested military technology, particularly its highly effective missile defense systems which recently intercepted the vast majority of Iranian attacks. These battlefield-proven systems have become valuable marketing assets, drawing increased global demand.
The tech sector—long the cornerstone of Israel’s economic narrative—remains equally dynamic. In just the first half of 2025, Israeli tech companies raised $9.3 billion, a 54% jump compared to the previous six months. Innovations in artificial intelligence and cybersecurity, often refined in real-world conflict environments, continue to attract significant international investment.
But beyond raw numbers lies a deeper story of structural resilience. Israeli investors, seasoned by decades of geopolitical instability, maintain a long-term outlook and remain committed to the market’s fundamentals. The Israeli economy has evolved into a diversified engine of growth. While tech remains vital, banking, defense, insurance, and real estate sectors now play increasingly pivotal roles.
Ironically, the ongoing conflict has strengthened Israel’s strategic position. The weakening of hostile actors and damage to Iran’s nuclear capabilities have, in the eyes of many investors, enhanced Israel’s long-term stability and appeal.
In a global climate of caution, Israel’s economy is sending an assertive message: resilience, diversification, and confidence can drive growth—even in the shadow of war.
