(Bloomberg) -- Jefferies Financial Group Inc. expects further growth in Israel’s tech sector despite political unrest over government plans to overhaul the judiciary.
“While there are considerable uncertainties, we anticipate Israel’s tech ecosystem growth and maturation will only accelerate, creating a dominant and necessary opportunity set for investors,” Jefferies said in a report seen by Bloomberg ahead of publication at a later date.
Many in Israel’s tech community have backed mass rallies against the plan by Prime Minister Benjamin Netanyahu’s government, which have gripped Israel since January and roiled the shekel. Investors and economists have warned the policy changes could drive away foreign investment and batter the economy. Nationwide protests are planned starting Tuesday, with Wednesday planned as a day of demonstrations by the high tech industry.
Jefferies, which has an office in Israel and is a remote member of the Tel Aviv Stock Exchange, said “attention should be paid to ensure that any reforms uphold the principles that have contributed to the success of the Israeli tech ecosystem,” such as a “robust legal system.”
At the same time, the report expressed confidence that Israel’s tech industry will remain globally attractive.
“The volume and density of innovation has made Israel a mandatory destination for all leading investors and will likely create a disproportionate number of category-defining winners across sectors in the many years to come,” according to Jefferies.
Read more: Netanyahu Says Tech Entrepreneurs Will Lose If They Leave Israel
Investment in Israeli tech in the second quarter fell to $1.7 billion, the lowest since 2018, according to Startup Nation Policy Institute data.
Technology accounts for more than half of Israel’s exports and a quarter of tax revenue, according to government data.
--With assistance from Gwen Ackerman.
(Updates with details of protests in third paragraph. A previous version of this story corrected the timing of the publication.)
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