Like many of its fellow travellers, the stock market in Tel Aviv has spent the past few months marking time. Whilst the fundamentals are looking good, European economic uncertainty is acting as a restraint.

Yesterday, there was a serious incident on Israel’s border with Lebanon. Combine that with an unusual  rocket attack on Eilat the previous day, and you would expect investors to get jittery. The fact is that after an initial dip of 1%, the index closed the day’s trading marginally down.

To paraphrase a previous CNBC comment about Israel, it is a country that has discovered a path to economic growth, not because of stability, but despite geopolitical uncertainty.

Israel’s stock market has just released a report for the period covering January – July 2010. There are over 600 listed companies. The value of bonds and equities together is close to US$400 billion.

What sparked my interest was the level of daily trading. It has now reached US$567 million, 3% above the previous high of 2008 and many miles away from the troughs of 2009.

That is a true sign of long term confidence in the Israeli economy.