Steven Schoenfeld has hidden in bomb shelters and safe rooms three times since arriving in Tel Aviv from New York July 7 and still hasn’t missed a single meeting.

“After a red alert, people just go on back to business,” Schoenfeld, who is in Israel’s financial capital to promote indexes for the nation’s stocks built by his firm, Blue Star Global Investors LLC, said by telephone on July 10.

In a week during which militants launched more than 600 rockets from the Gaza Strip and more than 100 Palestinians perished in Israeli strikes, the Tel Aviv TA-25 Index fell less than the MSCI World Index of developed-nation stocks and yields on domestic 10-year bonds dropped. Two companies sold 515 million shekels ($150 million) of bonds last week and bets on fluctuations in the shekel remained near a nine-year low.

While Israel is mobilizing 33,000 soldiers for a possible ground invasion of the Gaza Strip that may trigger a selloff, the market reaction so far has been muted. It’s the worst fighting since November 2012 when Israel and militants exchanged fire for about eight days as the TA-25 gauge gained 0.7 percent. In the Gaza War that took place from December 2008 to January 2009, the equity benchmark outperformed developed-nation stocks, advancing about 5 percent while global shares slumped approximately 4 percent.

“It’s almost like the markets have become immune to this type of situation,” Neil Corney, chief country officer of Citi Israel, said by phone from Tel Aviv on July 10. “Most people are looking at what has happened in the past and realize these things generally are contained to a short space of time.”

Peace Talks

The latest fighting follows the collapse of U.S.-led peace talks in April and the killings of Palestinian and Israeli teenagers, dimming any chance of renewing negotiations soon.

Militants in the Gaza Strip have continued firing cross-border rockets and thousands of Palestinians have fled their homes in advance of a possible ground invasion. About 170 Palestinians, including dozens of children and other civilians, have been killed since Israel stepped up its air raids on Gaza a week ago in response to intensified rocket fire, according to Gaza’s Health Ministry.

The TA-25 gauge jumped 1.3 percent yesterday, bringing its advance since dropping to a four-month low on July 8 to 1.8 percent. It had retreated 1.5 percent between July 3 and July 10, less than the 1.7 percent decline on the MSCI World Index. Israel’s 2024 bond also gained, with the yield falling five basis points, or 0.05 percentage point, to 2.85 percent in the six days through yesterday. The TA-25 index advanced 0.6 percent at 1:13 p.m. in Tel Aviv today, while the yield on the benchmark bond declined 1 basis point to 2.84 percent.

Companies are still making plans to bring bond and equity deals to the market. Ratio Oil Exploration 1992 LP, which owns a 15 percent stake in Israel’s Leviathan gas field, said July 8 it created a special-purpose company to issue debt. Alony Hetz Properties & Investments Ltd., a real-estate investment company, said today it’s considering a sale of shares and options to the public.

The conflict may prompt domestic investors to switch from financial or cyclical stocks to more defensive strategies such as telecommunication or pharmaceutical shares, said Jacob de Tusch-Lec, who helps oversee about $23 billion in equities at Artemis Investment Management LLP in London.

Best Performers

Bezeq Israeli Telecommunication Corp., Israel’s largest fixed-line provider, defied the drop in the TA-25, gaining 1.9 percent in trading on the Tel Aviv stock exchange last week. It has climbed 9.5 percent this year, while Teva Pharmaceutical Industries Ltd. rose 35 percent. Shares of Bezeq fell 0.1 percent and Teva advanced 0.5 percent today.

“All investors know that at times like this, you don’t sell, you actually buy,” Tusch-Lec said by phone on July 10. “Unless there is a worse-case scenario, like suicide bombings in Tel Aviv or a rocket hitting a building in Tel Aviv with many casualties, then that would be a whole different level.”

Fund Flows

The benchmark gauge for Israel’s $200 billion stock market, one of the smallest among developed nations, has advanced 4.6 percent this year through yesterday. The MSCI World Index gained 4.4 percent this year through July 10, while the Standard & Poor’s 500 Index has advanced 6.3 percent.

Investors added about $16 million to Israel-related equity funds in the two weeks through July 9, according to data compiled by EPFR Global, a Cambridge, Massachusetts-based company that tracks fund flows.

The Israeli shekel strengthened 0.1 percent to 3.4264 per dollar today. It depreciated 0.3 percent from July 3 through July 11, curbing its gain for the year to 1.4 percent.

While three-month implied volatility on the shekel increased to 4.51 percent last week from 4.35 percent on July 3, it’s still near the nine-year low of 4.29 percent set on July 4, according to data compiled by Bloomberg.

It would take a ground-force assault to upset markets, said Citi Israel’s Corney. There has been “almost no reaction whatsoever” from foreign investors, aside from humanitarian concerns, he said.

Teva, Perrigo

“We would never make an investment decision based on just geopolitical considerations,” William Scholes, who helps oversee the Aberdeen Israel Fund at Aberdeen Asset Management Plc, said by phone from London on July 10. The firm manages $180 billion in equities. “We continue to monitor the companies we are invested in and have faith that strong management teams locally will respond as necessary.”

Scholes’s top Israeli equity holdings include Teva Pharmaceutical, Check Point Software Technologies Ltd. and Perrigo Co., according to a May performance report for the fund.

While an escalation of the conflict may hurt Israel’s economy by discouraging tourism and swelling budget costs, foreign investors so far view the situation as “pretty much business as usual,” Citi Israel’s Corney said.