War clouds have finally clipped the wings of Israeli-connected companies trading on world stock markets with many of those shares seeing sharp declines as investors abroad sell their holdings in reaction to the continued escalation of violence in the North. "The reaction of British investors under pressure from the pictures they see on television has negatively affected Israeli companies trading outside of Israel although the majority of their [the companies'] activities is abroad and not in Israel," said Amir Raveh, CEO of the British investment house MG Equity. "There is no reason for the escalation in Israel to affect their activity." As the conflict in Israel and Lebanon continues, the firm said British investors have decided not to take risks and to sell part of their holdings in Israeli companies listed on London's AIM market. According to a survey conducted by MG Equity, about 16 of the 40 Israeli companies listed on AIM experienced sharp declines of between 2 percent and 16% over the past two days. Early in the conflict, however, it had appeared to be largely Israeli investors who were taking money out of local shares while foreign investors hung on. The Israeli company hardest hit by the situation over the last couple of days was the international entertainment group Dori Media, whose shares fell 16.67% on London's Aim in Monday trading. Other Israeli companies that saw share declines not related to their fundamental situation were Leadcom, which lost 10.5% Monday; MTI Wireless Edge Ltd., which lost 7.32%; and Bateman Advanced which dropped 5.56%. Israeli stocks on Wall Street also have slumped as investors sold shares in response to the violence. Analysts at CIBC World Markets attributed the falls primarily to psychological factors, saying they were not related to the business activities of the companies themselves apart from Retalix and Radcom who published profit warnings. Most of the revenue of Israeli companies traded abroad comes from sales in international markets, with no substantial exposure to Israel, which means that the hostilities would not have a real impact on corporate activities, CIBC said. Among the companies traded on the Nasdaq that saw sharp declines as violence escalated are Delta Galil Industries which lost 17.2%, TAT Technologies, which dropped 17.1% and Elbit Medical Imaging, which was down 16.2%.