from the October 2007 issue

FTSE grants Israel "developed" status

FTSE Group has granted Israel "developed'' status, which will enable the Tel Aviv Stock Exchange (TASE) to attract more from the estimated $2-2.5 trillion in funds that track the FTSE indices.

"Bloomberg" quotes Citigroup Israel head of trading Neil Corney as saying, "This is a positive. It's going to mean that more international investors will be able to invest in Israel.''

"Bloomberg" adds that shares including Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) may be affected as investors who benchmark against the indexes, buy or sell to reflect today's announced changes, which take effect from June 2008. Most funds are restricted to investing in developed markets because of their perceived lower risk.

FTSE Group said that the FTSE Policy Group found that "Israel meets all quality of markets criteria for a developed market and has done so since being included on the Watch List in 2006. A new FTSE Index for developed markets in Europe, Middle East and Africa will be introduced for those investors wishing to integrate Israel within their existing Developed Europe portfolios.

"Bloomberg" says, "Israel took steps in the past two years to raise its profile among foreign investors and increase the perception that its $140 billion economy was ready for upgrade to developed status."

"Bloomberg" adds, "The Tel Aviv index has almost tripled in the last four years, as the economy marks its fifth year of growth. New foreign investment in exchange-listed securities in the first half of this year reached $967 million, compared with $2.1 billion for all of 2006, according to the Bank of Israel.

"FTSE's requirements also include a wealth test, which Israel met as gross national income per capita rose to $18,620 in 2005. The World Bank classifies any country with ``high'' income to have Gross National Income of at least $11,116."

Commenting on FTSE's upgrade of Israel to developed market status, Merrill Lynch reports that the Israeli market can expect a large inflow from investors in developed markets, while outflows should be small.

"We learned at our meeting with FTSE that they expect net inflows of US$2-3 billion from developed market investors into the Israeli market," according to Merrill Lynch analysts.

Reprinted from the Israel High-Tech & Investment Report October 2007

Click HERE to request further information.
Click HERE to go BACK.