Israel’s stock market is set to crash this week after the government said it plans to sell off its vast holdings in the largest Israeli conglomerate and to pay for a restructuring.
The decision to sell its stakes in the world’s largest stock market, worth $14.8 trillion, came after Finance Minister Yuval Steinitz announced a review of its holdings to reduce its exposure to a range of sectors.
In addition to the government’s plans to cut its holdings in Amdocs and Yair, the rest of the market is likely to be hit by the selloff, which could hit the country’s stock price by as much as 20% if the deal goes through.
“This decision by the Finance Ministry is aimed at avoiding a collapse in the stock market,” a spokesperson for the Israel Securities Authority told Reuters.
The news comes amid a long-running war of words between Prime Minister Benjamin Netanyahu and Finance Minister Avigdor Lieberman over the future of the Amdocs group.
In June, a court ruled in favour of Lieberman’s party, saying the sale of the business to private investors would not have been legal under Israel’s legislation on state-owned enterprises.
The company is a subsidiary of the Israel Electric Corporation, which owns a number of state-run utilities.
The divestment has already had an impact on the market, as the value of the Israeli stocks plunged on Thursday.
The Tel Aviv Stock Exchange dropped by about 40%, while the Nasdaq dropped by 20%.
The government has also been selling off stakes in companies like the telecoms giant AT&T, which are also owned by the Israel Electricity Corporation.
Netanyahu and Lieberman, who have been in office for five years, have clashed over whether the country should continue to hold onto the nuclear arsenal and how much to invest in the Israeli economy.
Netz has said Israel should keep nuclear weapons, but Lieberman said Israel must diversify its economic base and should invest in education and infrastructure.
The Israel Stock Exchange on Thursday said it will be suspending trading in the Amdoc stock.
The stock market in Israel has been heavily damaged by the ongoing war between Israel and the Palestinians in the West Bank, and its collapse could affect the countrys economy.