PDA

View Full Version : Israel's Economy Back on Track


Weddigen
Tuesday, November 14th, 2006, 05:33 PM
Truely makes interesting reading and warms the cockles of my heart......

Note foreign investments banks there, namely Deutsche.


Israel's Economy Is Back on Track

Source: Business Week , 7th November 2006

Thanks to foreign investment, fiscal stability, and high-tech exports, the country is enjoying solid growth after the Lebanon war hiatus
by Neal Sandler

Less than three months after a costly war in Lebanon, investors have quickly regained confidence in the Israeli economy, driving the Tel Aviv stock market to all time highs. On Oct. 31 the key TA-25 index of the largest companies traded on the exchange broke through the 900 threshold, and it's now trading at 910. The index has gained 22% since its mid-July low when the war broke out.

The war temporarily put the brakes on growth, but the Israeli economy is now back on track. "We're not only witnessing a recovery but an across the board strengthening in nearly every sector of the economy," says Gil Bufman, chief economist at Bank Leumi.

The sole exception is the tourism industry, which is still suffering the impact of the month of fighting. Even retail sales that fell during the war have rebounded. Fears that a protracted conflict would hit the economy hard have not materialized, and economists are now predicting growth of 4.5% for 2006, only half a percentage point down from pre-war estimates. The consensus is that growth next year will be around 4%, buoyed by exports as well as strong domestic demand.

Capital Flow Continues

The quick return to growth has contributed to the upbeat mood on the bourse. Capital continues to flow into Israel at record levels, with direct foreign investment expected to top $12 billion this year. In May Warren Buffett jumped on the bandwagon when his Berkshire Hathaway ponied up $4 billion to take an 80% stake in Iscar Metalworking Company (see BusinessWeek.com, 9/18/06, "Buffett Tours Plant in War-Scarred Tefen").

Exports are also up sharply. The country's high-tech sector continues to lead the way, with sales abroad up 20% this year. The inflow of foreign investments coupled with the export boom will translate this year into a $6 billion balance of payments surplus.

The flood of cash also has led to an unprecedented strengthening of the shekel. The Israeli currency has appreciated by nearly 8% against the dollar since the beginning of the year, much of this occurring since the end of the Lebanon war. The strength of the currency and negative inflation in recent months led the Bank of Israel on Oct. 23 to reduce its key lending rate by a quarter of a percentage point, to 5.25%.

High Productivity, Low Inflation

"The current interest rate environment is fueling the market upwards," says Richard Gussow, senior analyst at Nessuah Excellence, a Tel Aviv-based investment bank. Analysts are predicting that the central bank will cut rates by a further half a percent in the coming months.

To be sure, the strong shekel could have a negative impact on exports. But economists say that rising productivity and very low inflation will offset the appreciation. In addition, high value-added tech exports, which account for about half of the $40 billion in foreign sales, are far less sensitive to currency fluctuation than commodities.

There is also continued confidence in the Israeli government's fiscal policy. Despite an increase in government spending to pay for the war, the budget deficit is expected to remain at around 2% of gross domestic product. The recent broadening of the government coalition is likely to help the finance ministry stick to its budget targets. Israel's fiscal responsibility has not gone unnoticed by international credit agencies. In recent weeks, both Moody's and Fitch Ratings issued positive outlooks on the government's long-term debt.

Foreigners in the Bourse

Foreign interest in the Tel Aviv market remains keen. Until recent years, most of the foreign interest in Israeli companies was limited to those traded on U.S. markets, where over 100, mostly high-tech, firms are listed. But foreigners are now playing a major role in Tel Aviv as well. "They account for about 20% of trading volume, though in the major blue chips it's much higher," says Yaron Bloch, head of equities for UBS Securities Israel.

The Switzerland-based investment bank was the first to buy a seat on the Tel Aviv Stock Exchange nearly 10 years ago.

It has since been joined by HSBC (HBC), Deutsche Bank (DB), and Citigroup (C). The foreign investment has traditionally gone into companies such as Israel Chemicals, Teva Pharmaceutical Industries (TEVA), Bezeq Telecom, Makhteshim Agan Industries, Bank Leumi, and Bank Hapoalim (see BusinessWeek.com, 11/7/06, "Investors Sell Teva after Profit Surge").

But lately, new favorites include Africa Israel Investments and the Delek Group (DK), both with substantial real estate holdings in Israel and abroad, as well as Ormat Industries (ORA), a global leader in the renewable-energy field (see BusinessWeek.com, 11/1/06, "Smart Solutions for Global Warming").

No Exodus

Ironically, much of the panic selling that occurred during the first days of the war in July was by Israeli investors who feared that foreigners would exit the market en masse. When the exodus didn't materialize the market began to rally. While technically classified by international investment banks as an emerging market, the Tel Aviv bourse has not witnessed the volatility of markets such as Russia and India.

Most local and foreign investment banks active in the Tel Aviv market remain bullish even as the market trades at record levels. "We continue to rank Israel as overweight due to the strong economic fundamentals," says Bloch of UBS. That assessment was backed up recently by Tel Aviv-based Leader Capital Markets which predicts that positive macroeconomic indicators will support the market at least through mid-2007. The war took its toll—but not, evidently, on Israel's investors.


Sandler is a correspondent for BusinessWeek in Jerusalem.

Dr. Solar Wolff
Wednesday, November 15th, 2006, 05:18 AM
The Israeli economy, if that isn't an oxymoron.....

Has anyone here ever bought anything made in Israel? Has anyone ever seen an item made in Israel?

The Israeli stock market. This reminds me of a school rhyme (rather racist):

Ching Chong Chinaman sitting on a fence
Trying to make a dollar out of fifteen cents

Pervitinist
Monday, November 20th, 2006, 03:19 AM
The Israeli economy, if that isn't an oxymoron.....

Has anyone here ever bought anything made in Israel?

Yes, pomegranates and oranges! ... ah yes, and some tasteless dry matzo bread :)

Has anyone ever seen an item made in Israel?

Yes, and used it: An Uzi submachinegun. :)

The Israeli stock market. This reminds me of a school rhyme (rather racist):

Ching Chong Chinaman sitting on a fence
Trying to make a dollar out of fifteen cents

Now here you're right!

Basically the Israeli economy is fueled by German Holocau€t reparations, the tribute paid by the US as well as money sent home by the parasitic Jewish diasporas.

Baaß
Monday, November 20th, 2006, 08:15 PM
Israel's Economy Is Back on Track

The Switzerland-based investment bank was the first to buy a seat on the Tel Aviv Stock Exchange nearly 10 years ago.
Hehe. I forgot about this. We are just as Jewish as Jews. :jude So very capitalist.:bounce

The Israeli economy, if that isn't an oxymoron.....
Why?
Has anyone here ever bought anything made in Israel? Has anyone ever seen an item made in Israel?
Yes. Perhaps you have for your frau? ;) http://en.wikipedia.org/wiki/Diamond_industry_in_Israel
"The Diamond industry in Israel is a world leader in producing cut diamonds for wholesale. Nearly two thirds of gem quality diamonds in the world are manufactured in Israel."

"Israel has a technologically advanced market economy with substantial government participation. It depends on imports of fossil fuels (crude oil, natural gas, and coal), grains, beef, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Israel is largely self-sufficient in food production except for grains and beef. Diamonds, high technology, military equipment, software, pharmaceuticals, fine chemicals, and agricultural products (fruits, vegetables and flowers) are leading exports. Israel usually posts sizable current account deficits, which are covered by large transfer payments from abroad and by foreign loans (although some economists would say the deficit is a sign of Israel's advancing markets). Israel possesses extensive facilities for oil refining, diamond polishing, and semiconductor fabrication. According to international data reported by the World Bank, Israel has the best regulations for businesses and strongest protections of property rights in the Greater Middle East."



http://en.wikipedia.org/wiki/Israel#Economy

Basically the Israeli economy is fueled by German Holocau€t reparations, the tribute paid by the US as well as money sent home by the parasitic Jewish diasporas.
I am suprised I have never seen people talk about Russians in the Israel.

"The influx of Jewish immigrants from the former USSR topped 750,000 during the period 1989–1999, bringing the population of Israel from the former Soviet Union to one million, one-sixth of the total population, many of them highly educated, adding scientific and professional expertise of substantial value for the economy's future. The influx, coupled with the opening of new markets at the end of the Cold War, energized Israel's economy, which grew rapidly in the early 1990s."