Israeli PM invokes Goldman Sachs and JPMorgan in economic defence

ISRAELI Prime Minister Benjamin Netanyahu has invoked Wall Street investment banks Goldman Sachs Group and JPMorgan Chase to rebuff warnings of a market backlash against his government’s plans to reshape the judiciary.

“They say that the judicial reform will keep investors away,” Netanyahu said in a video posted on Sunday (Jan 29) evening on Twitter. “But two of the biggest and most influential investment banks, JPMorgan and Goldman Sachs, say the exact opposite.”

The prime minister retweeted a screen grab of a JPMorgan trading desk note that called protests against his proposed judicial changes “largely noise” and said they didn’t “change the fundamental bullish picture for ILS rates,” a reference to shekel-denominated bonds.

Goldman Sachs economist Tadas Gedminas had written in a Jan 26 report that any “negative risk scenarios” from the proposed changes, such as reduced foreign investment, “would take years to materialise.”

Gedminas, and spokespeople for JPMorgan and Goldman Sachs, didn’t provide further comment on the reports when contacted by Bloomberg on Monday.

Proponents of Netanyahu’s plan say it’s needed to restore balance between the three branches of government, arguing that the supreme court has become overly activist. Critics say it gives the executive and legislative branches excessive power, and poses a danger to Israel’s democracy and its economy.

Tens of thousands of Israelis have protested the proposals, while some prominent economists and tech leaders have warned that they could damage the nation’s credit rating and the ability of Israeli companies to raise capital.

The shekel slid by as much 1.7 per cent on Monday and was trading 1 per cent weaker at 3.4700 per US dollar as of 4.55 pm on Monday. That was the biggest decline among major world currencies tracked by Bloomberg.

The combination of the proposed legal measures and rising tensions with Palestinians recently “was enough to shake investor sentiment,” BNP Paribas strategist Jerome Leibovici wrote in a note to clients on Monday.

“The reform has broad-based support from the government but following the recent slew of criticism and protests, we think it is likely that the Netanyahu-led government will moderate several aspects,” Leibovici said. “This will delay the reform’s package but will be received positively by the market.” BLOOMBERG