Netanyahu Bloc Expected to Hold 56 Seats After Tight Israel Vote
The lack of a clear winner has pushed down the shekel and raised bond yields as parties prepare for coalition talks.
By Jillian Foster ·
Partial results from Wednesday's Israeli election indicate that Prime Minister Benjamin Netanyahu’s bloc is likely to secure 56 seats in the 120-seat Knesset. Challenger Gadi Eisenkot’s bloc is projected to win 48 seats, with Arab-led parties taking an estimated 16 seats. More than 66 percent of ballots had been counted when the projections were released.
Markets reacted immediately to the narrow margin. The Israeli shekel dropped 1 percent against the U.S. dollar. The Tel Aviv 35 stock index fell 2.7 percent. Government bond yields rose across the curve. The 2-year bond yield increased by 6 basis points, the 10-year bond yield rose by 4 basis points, and the 30-year bond yield gained 2 basis points.
Eisenkot, a former military chief of staff, declared victory earlier in the day. He argued that the preliminary results give him the first right to attempt to form a government. In a post on X, he stated that the initial exit polls indicate a complete lack of confidence in Netanyahu and his October 7 government. Official results are scheduled for publication on Nov. 4.
Turnout reached 77.7 percent of eligible voters, the highest in a Knesset election in 27 years according to the Central Elections Committee. This was Israel's first national election since the Hamas attack on Oct. 7, 2023, and subsequent wars in Gaza, Lebanon, and Iran. Many viewed the vote as a referendum on Netanyahu, who has dominated Israeli politics since 2009.
Coalition building will likely be complex because outright majorities are rare. The president will ask a Knesset member to form a government, typically the leader best positioned to assemble a 61-seat majority. Ra'am leader Mansour Abbas said his party's vote will change the government. Joint List faction chairman Ahmad Tibi has outlined a plan to prevent Netanyahu from remaining in power.
Avigdor Liberman, whose party is projected to hold seven to nine seats in the opposition bloc, refused during the campaign to rely on Arab parties. Netanyahu warned of strong Arab participation in the vote, a comment that drew accusations of racism from opponents. He stated that without action, Israel would find itself with a government of Mansour Abbas and Ahmed Tibi.
Michael Feller, chief strategist at Geopolitical Strategy, noted that even if Eisenkot wins more seats, he may need Arab and left-wing parties to form a majority. Amin Saikal, an adjunct senior fellow at Singapore's S. Rajaratnam School of International Studies, said Netanyahu will fight for his political survival. Israel held five elections between 2019 and 2022 before a government was formed.
Source: CNBC
