Israeli securities watchdog heads to US to reassure investors amid Gaza war fallout

The Israeli securities watchdog's new chairman, Seffy Zinger, heads to the United States next week to woo U.S. investors and reassure them that it is business as usual despite Israel's three-month war with Palestinian terrorist group Hamas.

The past year was challenging for Israeli markets, with the main Tel Aviv 125 index dropping 15% following the October 7 attack on Israel by Hamas which led to the war in Gaza.

Seffy Zinger.

The index subsequently rebounded to end 2023 up 4% but still significantly lagged U.S. indices. It is now trading at pre-war levels.

Zinger, who took over the helm of the Israel Securities Authority (ISA) after years as a partner in the Corporate and Securities Department at a top Israeli law firm, said he was looking at prospects for economic recovery this year.

"We want to tell the world that the Israeli economy is functional during the war and the stock exchange didn't close even for one day," he told Reuters in an interview.

"We believe there is an opportunity in Israel that after the war the economy will grow. The same thing happened in past wars or military campaigns in Israel the last two decades. And the high tech sector is very strong."

The economy is expected to get a boost as the military gradually releases more than 300,000 Israelis drafted to reserve duty which led to labor shortages, many of whom came from the important high-tech sector.

Regulating artificial intelligence (AI) and improving corporate compliance and enforcement were also Zinger's main focus, he said, noting that Israel's securities laws were decades old and did not have AI in mind.

"How can we use AI technology for our purposes and on the other side is the market side and what is the best way to regulate it. What are the risks we are facing?," he said.

At the same time, the ISA is looking to tighten its enforcement capabilities by ensuring better reporting by companies and making punishments quicker and stronger.

"We feel there is room to further streamline the enforcement process," Zinger said. "What we are thinking as a regulator is how to incorporate new technologies into the market surveillance and enforcement in the capital market, given the new AI technologies available to us."

Zinger's U.S. trip, which was planned before the war with Hamas, is the first for an ISA chief since before the COVID pandemic. He will meet with his U.S. Securities and Exchange (SEC) counterpart and investors in New York and Washington.

He will make a presentation at the Needham conference on January 18, an annual event that brings together investors, industry experts and entrepreneurs to discuss latest trends and opportunities in the technology sector.

Zinger, who is seeking to more align local market regulations with global standards, said he wants to lure more foreign investors and companies to the Tel Aviv Stock Exchange now that all firms can report in English as part of a plan to boost foreign investment from just 20% participation.