Oct 12 (Reuters) – The iShares MSCI Israel
exchange-traded fund (EIS) suffered substantial outflows
this week after its price hit a three-year low as clashes
between Israel and the Palestinian group Hamas ignited fears of
a wider conflict.
The $116.92 million fund, the biggest exchange-traded fund
(ETF) exposed to Israeli stocks, saw net outflows of $4.94
million so far this week, on track for its worst weekly showing
in a month, according to Lipper data.
“If you look at EIS, it has more domestic exposure because
it holds Mizrahi and a few other financial services
companies,” said Aniket Ullal, head of ETF data and analytics at
CFRA, an investment research firm.
Financials make up over a third of the fund’s holdings,
according to LSEG data as of Sept. 30, while tech shares are the
second biggest sector.
The iShares fund slipped 1.1% to $49.4 on Thursday, its
lowest since May 2020.
The fund has fallen nearly 9% this week, as Israeli and
global markets sold off after Hamas sent fighters into Israel
over the weekend, leaving more than 1,300 dead and scores held
as hostages.
Israeli retaliation with air and artillery strikes has
killed more than 1,400 Palestinians and destroyed whole
neighbourhoods on the Gaza Strip.
Net flows in the other two ETFs exposed to Israeli stocks –
the ARK Israel Innovative Technology ETF and the
BlueStar Israel Technology – were negligible so far
this week.
“We believe that Israeli technology companies, which have
mostly global exposure and have proven their resilience in
operating during turbulent times, are likely to outperform
locally-oriented Israeli companies during this period of war and
regional tensions,” said Steven Schoenfeld, CEO of MarketVector
Indexes, creator of the ITEQ ETF, in a note.
All three funds have seen net outflows of between $10
million and $16 million year-to-date.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by
Susan Fenton)
