The age-old belief that “war is bad for the stock market” is facing a reality check in the Middle East.
On June 19, Iranian missiles struck the Tel Aviv Stock Exchange building in Ramat Gan, marking a historic escalation in hostilities. And yet, the Israeli market rallied.
Notably, the Tel Aviv Stock Exchange’s own shares (TASE.TA) closed the day up approximately 1.67% at around 6,161 ILA, pushing its year-to-date gains to over 45%. Meanwhile, broader indices also showed strength: the blue-chip Tel Aviv-35 reached a fresh 52-week high of around 2,834 points, while the Tel Aviv-125 index peaked near 2,850 points during the trading session.
In a twist of wartime market logic, investors appear to be betting not on peace, but on resilience.
Iran Tehran Stock Exchange
Markets in Iran told a similarly paradoxical story. The Tehran Stock Exchange index (TEDPIX) remained near its recent all-time highs, having soared approximately 46% year-over-year by mid-June.
Over the past year, TEDPIX’s significant gains have largely reflected aggressive domestic monetary expansion, a closed economy, and capital fleeing from currency devaluation rather than fundamental economic strength.
On X, pseudonymous macro trader Mr Derivatives summed it up bluntly:
“Iran’s stock market. Booming! Now regarding their inflation rate and debasing of currency… a whole subject on its own.”
A tale of two markets?
For Israel, part of the surge is rooted in sector rotation, defense contractors, cybersecurity, and commodity-linked stocks have all outperformed.
Government support for capital markets, and expectations of fast retaliation but contained escalation, have also kept foreign money from fleeing.
In Iran, the narrative is murkier. High nominal stock returns in Tehran often reflect the collapse of the rial more than real economic strength.
