Phoenix Financial Ltd. engages in the provision of insurance products. It operates through the following business segments: Life Insurance and Savings, Health Insurance, Property and Casualty Insurance, Pension and Provident, Financial Services, Insurance Agencies, and Credit. The Life Insurance and Savings segment includes life insurance products and related coverage, and management of pension and retirement. The Health Insurance segment offers nursing insurance, medical reimbursement insurance, surgeries and transplants, dental insurance, travel insurance, and foreign workers insurance. The Property and Casualty Insurance segment is composed of motor insurance, motor property, other liabilities, and property and other subsegments. The Pension and Provident segment deals with the management of pension funds and provident funds through The Phoenix Pension and Provident. The Financial Services segment is composed of investment management activities, including mutual funds, ETFs, brokerage services, underwriting services, market making in various securities and other services. The Insurance Agencies segment represents the activities of pension arrangement agencies and other insurance agencies in the group. The Credit segment refers to financing against postdated checks, clearing, and management of credit vouchers services, financing against real estate properties, loans and credit, equipment financing and supplier financing. The company was founded by David Hachmi in 1949 and is headquartered in Givatayim, Israel.
COMMENTARY
Market Review
Israeli equities advanced again in October as sentiment continued to improve around prospects for a new regional framework in the Middle East. While the process remains lengthy and complex, investors responded positively to the clearer direction set out by the US administration, helping extend the constructive trend seen in recent months. Local indices finished the month higher, supported by both domestic resilience and favourable global conditions.
Global markets were also strong. Improved US-China trade relations, following a productive meeting between President Trump and President Xi, lifted investor optimism and supported risk assets. The US Federal Reserve reduced interest rates by 25 basis points, as expected, reinforcing confidence across equity markets. Continued strength in AI-driven sectors further supported technology-oriented markets, including Israel.
The inflation data provided an additional boost. The September CPI fell 0.6% month-on-month, a larger decline than forecast, bringing annual inflation down to 2.5%. Together with an appreciating shekel and moderating geopolitical risk, this strengthened expectations that the Bank of Israel will cut interest rates at its late-November meeting. Markets now assign a high probability to an initial reduction, with a gradual easing cycle expected through 2026 as conditions normalise.
Economic indicators remained firm. Credit card purchases in July and August were materially higher than the second-quarter average, with early September data pointing to further gains. Core services exports expanded, supported by renewed strength in high-tech activity and rising demand for skilled workers. Manufacturing also rebounded, led by high-tech and defence-related industries, where production has shifted increasingly towards export markets as domestic pressures ease.
Overall, easing inflation, resilient economic activity, and improving regional dynamics created a favourable backdrop for Israeli equities as the final quarter of the year commenced.
Portfolio Commentary
The Fund delivered a positive return in October, supported by a constructive backdrop for Israeli equities and strong performance across several core holdings. Positioning remained focused on companies with clear earnings drivers, robust balance sheets, and exposure to long-term structural growth themes. Market breadth improved over the month, providing a supportive foundation for stock-specific catalysts to come through in performance.
Semiconductor exposure was again the largest contributor to returns. Camtek continued to benefit from strong demand across the global chip manufacturing ecosystem, supported by rising investment in AI-related infrastructure. The stock rose 17% over the month. Qualitau also performed well, gaining 12% as testing activity and utilisation rates improved. Together these positions contributed around 1% to the Fund’s return. These exposures continue to offer the portfolio access to structural growth areas that remain underrepresented in local Australian markets.
Energy holdings also added to performance. Isramco advanced after the Tamar partners launched a public initiative to increase the volume of natural gas exports. If successful, this expansion could materially enhance revenue generation from international markets and improve long-term profitability. The Fund continues to view this position as a stable source of cash flow exposure with embedded optionality, particularly as broader regional dynamics become more constructive.
Portfolio activity during the month remained measured. The team maintained exposure to high-conviction positions while allowing market developments to play through, particularly within technology-linked names where industry fundamentals remain robust. The broad improvement in investor sentiment supported the Fund’s focus on companies with proven operating resilience and clear pathways to value creation.
Looking ahead, the portfolio remains positioned to benefit from Israel’s improving economic backdrop and its globally relevant high-tech ecosystem. The recovery in manufacturing activity, renewed strength in high-tech exports, and rising demand for skilled workers all reinforce the long-term opportunity set across many of the Fund’s key holdings. While the macro environment continues to evolve, company fundamentals remain the anchor for portfolio decisions, and the Fund is well placed to participate in further upside should conditions continue to stabilise.