Unforeseen market shifts, a weakening US dollar, and turmoil in the global tech sector have shaped a complex investment landscape in the first half of 2026. Against this backdrop, the bankruptcy of Simad Holdings served as a reminder of the risks involved when Israeli institutional investors chase higher returns in foreign bonds, without adequately managing risk.
Speaking with "Globes" News Desk head Bar Lavi, Profit Financial Services founder and CEO Asaf Banai breaks with the consensus. Banai argues that fluctuations in the tech sector represent a greater risk to Israeli investments than geopolitical developments, explains the rationale behind his lower-than-market inflation forecast, and addresses the fundamental mistakes investors make when attempting to time currency movements.
The Profit Group, headed by Banai and Shlomi Elberg, is Israel's largest financial planning entity, managing assets of over NIS 100 billion. Recently, Leumi Partners and the Schestowitz family acquired a stake in the company, at a valuation of NIS 670 million for Profit. As reported by "Globes," this is five times the value estimated about a decade ago
Plot twists and investor errors
What surprised you the most about this half of 2026?
"The closure of the Strait of Hormuz as a result of the war, and the resulting surge in oil prices, was a plot twist no one had factored into their calculations. But it proved less alarming than it could have been from an inflation standpoint. Even so, it was a dramatic development that affected the markets," Banai says. "Alongside the inflationary pressure stemming from oil prices, the US labor market actually issued very strong data, giving the US Federal Reserve Chair greater confidence to raise interest rates."
Here's how it looks in numbers: The surge in energy prices pushed the annual US inflation rate to a three-year high of 4.2%. This elevated reading had not been factored into forecasts and moved the Federal Reserve even further away from its 2% inflation target. Whereas investors began the year anticipating a series of interest rate cuts from the new Federal Reserve Chair [Kevin Warsh], expectations on Wall Street have since reversed completely. Futures markets are now increasingly pricing in the likelihood of an interest rate hike in the near term.
A scenario in which the world's most influential central bank is forced to raise interest rates again could rattle equity markets and weigh on corporate profitability. Israel, however, is moving in the opposite direction, he says: "The [Bank of Israel] Governor had stood firm against cutting interest rates but has now begun lowering them and has also intervened in the foreign exchange market by purchasing foreign currency."
Banai refuses to commit to whether this situation is good or bad, but says rather that, "It's like rain, it's just there." Which is why in his opinion, the most important thing is to diversify investments, to safeguard against surprises of this kind.
What’s the biggest mistake investors have made in the past six months?
"The fundamental pitfall is always trying to time the market when it comes to currencies," says Banai, referring to the sharp fluctuations recently seen in the dollar-shekel exchange rate. "Many people in the tech sector, for example, receive stock options that have vested and converted into shares, resulting in substantial US dollar amounts. But when it comes time to invest the proceeds, they’re hesitant. They ask, 'What about the dollar? Will it rise or fall?' And my answer is that I can’t know for sure. Then I ask them, 'Why do you care? Does a US investor worry about the shekel? You live your life in shekels.'"
As he sees it, the very act of waiting is damaging. "If the dollar falls, the person becomes even more entrenched and may wait a long time without making a decision. And this is the most dangerous place. Manage your money, you live in shekels and you don't have to care about the dollar rate. This is one of the biggest mistakes Israelis have made, like when they ran to the S&P."
Banai was referring to the S&P 500 investment trend, saying, "The trend is not your friend," adding, "If your taxi driver or barber asks you about the S&P, that’s the time to run away. That's the rule of thumb."
Best tip: Overcome ego, fear, and greed
What should we focus on most when reviewing our pension statements and retirement savings accounts?
"My advice hasn't changed, and it’s still boring: manage your money wisely by overcoming the three biggest obstacles: ego, fear, and greed. That's our profession. It sounds simple, but in practice it's hard because people naturally possess these traits. For example, ego makes us reluctant to 'come out looking like suckers' when it comes to the dollar exchange rate.
"Our chief economist, [Profit Financial Services Chief Economist and Deputy Managing Director] Amir Kahanovich, recently published a model showing a reversion to the mean in the performance of our general investment track. It is currently expected to deliver a return of about 9%, whereas the model suggests 7%. Even so, I believe there is still additional upside to be captured."
However, Banai emphasizes that today "Market prices are high. US earnings multiples are at 31, which is high. Not like in 2008 or during the dot-com bubble which was also 100, but they’re already high. You’ve got to remember that the market knows how to go down, too."
The Tel Aviv Stock Exchange has also been showing significant gains for three years in a row.
"I had a conversation recently with Amir Kahanovich and he said something interesting: ‘The greatest threat to Israel isn't Hamas or Hezbollah, it's technology.’ And now we're seeing the market decline. Israel is as heavily exposed to the tech sector as it is to geopolitical developments. How do we know the market isn't all that concerned about the geopolitical situation? Because Israel's risk premium has fallen. So, if the market declines aren't being driven by geopolitics, they're probably being driven by technology. "Indeed, Israel's risk premium, as reflected in the price of its credit default swaps (CDS) - the financial instruments used to insure against a default on government bonds - recently completed its recovery and is back to where it was on the eve of the war following October 7, 2023.
The Musk IPO connection
The tech dominance Banai mentions received a major boost on June 12, 2026 with what was defined as the largest initial public offering (IPO) in market history. Elon Musk's SpaceX raised a whopping $75 billion at $135 per share, recording phenomenal demand that was four times higher than the supply (over $250 billion). With the start of trading on the Nasdaq (under the ticker SPCX), the stock jumped 19% on its first day of trading, pushing the company's market cap above the $2.1 trillion mark, making Musk the world's first trillionaire.
However, this was apparently just the opening salvo for a year of mega-IPOs. Investors’ appetite for liquidity in the tech sector is expected to grow in the coming months, as two AI giants, OpenAI and Anthropic, are in advanced stages of preparing their own blockbuster IPOs, to raise enormous sums. In the longer term, these fundraising waves could reshape the world’s leading stock indices, channeling massive amounts of pension and retirement funds into a single industry.
In this context, it’s worth paying attention to a number of major events: Elon Musk's SpaceX IPO and preparations for the OpenAI and Anthropic IPOs, have steered entire portfolios in the direction of tech. What can we expect as a result?
"There is a lot of uncertainty, so I’m willing to make a prediction only regarding the general investment track. We have scenarios in which these stocks rise and scenarios in which they don’t. Overall, I believe we can still squeeze out another 2%-3% return by the end of the year in the general track. Where exactly will it come from? I don’t know. I’m better at forecasting and planning for the debt markets. The figure I mentioned could be achieved even if the stocks you referred to deliver zero returns or even decline. Our model forecasts 7%, but I believe the actual return will be slightly higher. Why? Because I’m naturally optimistic. Amir, our economist, asks me, 'If you believe in something, why don’t you put it into the Excel?' My answer is that a spreadsheet has no soul.
"The shekel is destined to get stronger. I don't know where it will stop."
Time after time during the first half of the year, and even more so in recent months, the US dollar has been pushed down, crossing the NIS 3 mark and touching lows not seen since the 1990s. This weakening is not by chance, but rather the result of a combination of forces that operated in parallel and coalesced into a perfect storm.
On the one hand, foreign investment inflows to Israel’s tech sector have stayed strong despite global turbulence, alongside massive dollar sales by institutional investors for hedging. On the other hand, the relatively high real interest rate by global standards make investment in Israel even more attractive. This is despite the fact that the Bank of Israel has already begun making nominal interest rate cuts this year and has even had to intervene directly in foreign exchange trading.
The weakening of the dollar has a complex domino effect on the Israeli economy. For local consumers, this is positive news in the short term, as it moderates inflationary pressures by lowering the price of foreign goods, from raw materials to vacations abroad. On the other hand, this is a dangerous erosion in profitability and international competitiveness for the export sector, chiefly the tech industry, which records revenue in dollars but pays wages in shekels. Also harmed, as noted, are savers with exposure to the dollar, especially those who invest in channels that track the S&P 500.
The dollar fell to about NIS 2.8/$. Although it rose from that low, to about NIS 3/$. The last time we were at those levels was in 1992. Do the market’s underlying fundamental forces suggest we have reached the limit, or are we likely to see the exchange rate reach new lows?
"In my view, it’s not a matter of concern. The dollar-shekel exchange rate matters to exporters and importers, but it shouldn’t matter to you as someone who lives in Israel. Manage your investments in shekels and maintain foreign currency exposure. When you buy a security, you’re inevitably exposed to the dollar; when you buy Facebook stock, you have dollar exposure. But that’s not an investment channel."
"I don't like to make predictions about it, but if you ask me about the macro level going forward, the fundamental forces are that the Israeli economy is strong, and so the shekel is destined to get stronger. We said it when the dollar was at five shekels, we said it at four shekels, and I don’t know where it will stop. But it’s a balloon with a standard deviation that is simply irrelevant. So, you know what? I regret even saying that. The dollar’s exchange rate isn’t what matters, that’s the truth."
Regarding the inflation forecast, Banai notes that, "We are among the entities that advise the Bank of Israel in forecasting the interest rate. There are 11 such bodies, and every month we provide a forecast. They ask for predictions and derive inflation from that. We gave a somewhat strange forecast, 1.5%, when everyone else gave above 2%. It looked like a bungle on our part, because oil had raised inflation. But now inflation has also taken a hit due to the decline in the dollar exchange rate, and there’s also considerable pressure on moderation or even a decline in rent prices. So, we believe this is what will happen: inflation, looking to the future, will be very low."
The consensus in the capital markets is that inflation in Israel will stand at no more than 2% by the end of the current year, right at the midpoint of the Bank of Israel’s price stability target range of 1%-3%.
Simad bankruptcy: "We'll see more like this"
Banai also addresses what, in his view, was not a surprise this year -unfortunately. "The US bonds. It’s so infuriating, given the Simad bankruptcy case. When a US company comes to issue bonds on the Israeli market because there’s no money over there…"
The reference is to US-based summer camp operator Simad Holdings, which filed for bankruptcy and failed to meet its obligations to bond-holders, sending NIS 440 million in bonds up in smoke. Among the big losers were More Investment House, Finessa Capital, and Yellin Lapidot. This was after the controlling shareholders, brothers Michael and Davis Shabsels, emptied the company's coffers and took $34 million for their private businesses, leading to the company's insolvency.
"It’s a great temptation, because they offer higher interest rates. It is difficult for institutional investors to restrain themselves, because they have nowhere to invest, but the risk materialized. In my opinion, the writing was on the wall." Banai adds reassuringly, "[it’s] marginal in relation to the scope of pension assets, there’s no need to be worried. Still, this tendency [towards lack of restraint] should be avoided." In his opinion, "We will see more cases like this."
Banai concluded the interview by saying, "I truly hope we don’t get swept up in the euphoria we feel when we are winning a war, or fall into despair should we feel we are losing. Everything is fine, the Jewish people are in their land, the world will go on, and all will be well. We will act with care, wisdom and humility and we will succeed."
The interview is part of a "Globes" series, "The Path to Financial Growth," produced in collaboration with Profit Financial Services.
Published by Globes, Israel business news - en.globes.co.il - on July 12, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.