The Tel Aviv Boom
Two years of multifront war should have crushed the Tel Aviv Stock Exchange. Instead the TA-35 rose ~52% in 2025, market cap hit NIS 2 trillion, and the IPO window reopened. What drove the boom — and the structural reforms underneath that outlast it.
Two years of multifront war should have crushed the Tel Aviv Stock Exchange. Instead, 2025 was the best year in its history — and the structural reforms underneath the rally may matter more than the numbers.
Here is the result that almost no one predicted. In 2025 — through the war with Hamas, the exchange of fire with Iran, and sustained international pressure on Israel — the Tel Aviv Stock Exchange posted the best year in its history and outperformed every major global market.
The TA-35 index of blue-chip companies rose about 52%. The benchmark TA-125 climbed roughly 50%. The TA-90 gained around 47%. Over the same window the S&P 500 returned about 18% and the Nasdaq-100 about 21%. Measured from the October 2023 trough, the TA-35 roughly doubled.
The numbers
TASE's own equity market capitalization reached roughly NIS 2 trillion by the end of 2025 — up about 46% in a single year. Average daily cash-equities trading volume rose to around NIS 3.4 billion, a 57% jump over 2024. The primary market reopened: 21 IPOs during the year plus five additional listings without capital raises, with total equity capital raised leaping to roughly NIS 21 billion from about NIS 8 billion in 2024.
Foreign investors — net sellers during the 2024 disruption — came back, buying several billion shekels of Israeli shares, concentrated in financials and defense. The shekel strengthened materially against the dollar across the year, and the 10-year government bond yield fell, reversing the prior year's trend. The exchange operator itself (TASE: TASE), a listed company, reported record revenue and net profit up about 79%.
What actually drove it
Three forces, layered.
Banks and defense. The financial sector led, with Israeli banks posting strong results and defense names re-rating on global demand. These are the heavyweights of the index, so their move pulled the whole market.
The de-escalation trade. Gains accelerated after the June 2025 confrontation with Iran and the subsequent ceasefire and hostage-return agreements. Markets price the removal of tail risk, and Israel's risk premium compressed visibly through the second half.
Domestic conviction. Israeli retail investors bought heavily — well above foreign inflows — through the worst of the uncertainty. The rally was built first on domestic belief, then confirmed by returning foreign capital.
The reforms underneath
The rally is the headline. The structural changes are the story Olam readers should hold onto, because they outlast any single year's returns.
The trading week moved. In early 2026 TASE shifted to a Monday–Friday trading week, aligning Israel's market with global calendars instead of the legacy Sunday–Thursday schedule — an unglamorous reform that directly raises foreign participation.
Dual listing keeps deepening. The dual-listing framework — Israeli and foreign companies trading simultaneously in Tel Aviv and abroad — took a marquee step with the dual listing of cybersecurity giant Palo Alto Networks on TASE, a global-credibility signal beyond its trading volume.
New indices for new sectors. TASE launched a wave of sector indices — TA-Defense, TA-Technology 35, TA-Real Estate 35, TA-Infrastructures, TA-Israel Energy — building investable products around exactly the themes this publication tracks. The exchange is also exploring a partial or full sale of its index business to an international partner.
The asterisks
Two cautions. First, the dual-listed biomed and technology names — companies whose prices track international markets rather than the local tape — were among the year's worst performers, a reminder that the TASE rally was concentrated in domestic financials and defense, not evenly spread. Second, a 50%-plus index year is not a baseline; it is a recovery snapping back off a war-depressed floor. The durable question is whether the reforms convert a rebound into a re-rating.
But the headline survives every asterisk. The market that was supposed to be the casualty of the war became the asset that outperformed the world. For a country whose stock indices double as a barometer of confidence, that is the most important number Israel printed in 2025.
