Israel's stock market is walloping its neighbors

Inside the Tel Aviv Stock Exchange
Ariel Jerozolimski | Bloomberg | Getty Images

Despite the geopolitical turmoil in the rest of the Middle East, Israel's stock market has been a stellar outperformer.

In fact, the country's principal equity indexes are surging at time when its neighbors are declining. The Tel Aviv 100 and Tel Aviv 25 have registered double-digit gains for the year, while many others in the region have shown lackluster numbers that have worsened considerably in recent days.

The most recent leg up for the Israeli markets, and leg down for regional competitors, came after Prime Minister Benjamin Netanyahu's election victory last month. That came amid a general recovery for Israel stocks, which slipped in 2014 amid economic turmoil in Europe, which Israel relies upon to take its exports, and the prolonged Gaza conflict.

"As Europe seems to have stabilized and other export markets continued to grow, Israel started to hit bottom and began to turn around," said Brian Friedman, president of Israel Investment Advisors, which has a private fund that invests in the country.

Though the market dipped in the days immediately following the bruising election, the TA 25 is up 3 percent over the past week. It has gained 6.9 percent in the past month and has risen 12.1 percent year to date and 16.1 percent over the past 12 months, according to FactSet.

Economists also have been moving up estimates for gains in Israel's gross domestic product, currently at 3.5 percent.

"You have to remember, Israel, even though it sits in the Middle East, it's much more like a developed Western economy," Friedman said. "The rule of law exists (in Israel) and you can't say that for any other country in the region."

The country has been aggressive in efforts to expand its equity offerings.