2015 Investing in Israel Factsheet

Evan Liberman Articles, News 3 Comments

Many clients and readers ask us for a quick overview of the Israeli economy, stock and bond markets. Why is investing in Israel a sound economic decision, they ask. Here is a your 2015 factsheet, with some extraordinary truths you may have never known about Israel.

Economy

Gross Domestic ProductGDP Growth compared to advanced economies

For the past ten years, Israeli has had impressive GDP growth year after year, outstripping by far that of Europe and the U.S. Year Over Year Growth:

  • 2014: 2.6%
  • 2015 (estimated): 3.0%
  • Advanced economies: 2.4% average
  • Latest 5-year average real growth
    • Israel: 3.8%
    • OECD: 0.6%

InflationInflation

  • 2014: -0.2%
  • 2015 (estimated): 1.1%

Interest Rates

  • Israel: 0.1%
  • U.S.: 0%-0.25%

Balance of PaymentsIsrael Current Account Surplus

  • Israel: in surplus
  • Current Account Surplus: 2.2% of GDP

Budget Deficit

  • 2014: 2.8% of GDP
  • 2015 (expected): 2.5% of GDP

UnemploymentUnemployment

  • Overall: 5.7%
  • Ages 25-64: 4.8%

ExportsMain Exports

Goods & services: 31.8% of GDP
Main exports:
  • Manufactured goods: 31.1%
  • Chemicals and related products: 26.8%
  • Machinery and transport equipment: 24.6%

Imports

Goods & services: 30.3% of GDP
Main imports:
  • Machinery and transport equipment: 28.8%
  • Mineral fuels, lubricants and related materials: 22.0%
  • Manufactured goods: 20.5%

Main Trading PartnersMain Trading Partners

  • U.S.
  • China

Government DebtGDP to Debt (Israel to US)

  • Israel: 67.4% of GDP (and decreasing)
  • U.S.: 101.5% (and increasing)

OECD Public Debt

World leader in science, technology and innovation: Israel

  • #2 Research & Development - (Japan is #5, U.S. is #11)
  • #2 in scientific research
  • #2 in public expenditure on education
  • #1 for innovative capacity
  • #1 in business expenditure on R&D (%)
  • #1 in cyber security
  • #2 for entrepreneurship of managers is widespread in business
  • #3 in qualified engineers available in labor market
  • #3 Information technology skills
  • #4 Researchers and scientists
  • #6 for Nobel Prizes per capita in the field of physics, chemistry, physiology, medicine and economics since 1950
  • #6 for strength of investor protection
  • World Economic Forum, Global Competitiveness Report 2014-2015: “The country’s main strengths remain its world-class capacity for innovation (3rd), which rests on innovative businesses that benefit from the presence of some of the world’s best research institutions (3rd), support by the government through public procurement policies (9th), and a favorable financial environment for start-ups (availability of venture capital is assessed at 9th place)."

Israel’s World Economic Forum Ranking

The Global Competitiveness Report 2014-2015 states “The country’s main strengths remain its world-class capacity for innovation (3rd), which rests on innovative businesses that benefit from the presence of some of the world’s best research institutions (3rd), support by the government through public procurement policies (9th), and a favorable financial environment for start-ups (availability of venture capital is assessed at 9th place)."

Israel’s Institute for Management Development (IMD) Ranking

The World Competitive Yearbook 2014 ranked Israel:
  • #1 Entrepreneurship
  • #2 Flexibility and adaptability
  • #3 Venture capital
  • #9 Adaptability of companies
  • #10 Financial Skills
  • #11 Resilience of the economy

Capital Market

International Credit Rating

  • Standard & Poor’s: A+, stable
  • Moody’s: A1, stable
  • Fitch: A, stable

Market Classification

Israel is considered a “Developed Market” by
  • MSCI
  • FTSE
  • Standard & Poor's

Indices

Israel is included in the following international indices:
  • MSCI World
  • MSCI KOKUSAI
  • MSCI Europe & Middle East
  • MSCI EAFE
  • MSCI EASE
  • FTSE All World
  • FTSE Med-100 indices
  • S&P Developed BMI

Tel Aviv Stock Exchange

TASE from high view

  • Established in 1953
  • Single national Exchange in Israel, facilitating the electronic trading of stocks, bonds, mutual funds, ETFs, options, futures, and other financial vehicles
  • Trading hours: Sunday-Thursday 9am-5:25pm
  • Large, established member firms: Bank of Israel, 15 commercial banks, 11 investment houses
  • Individual investors trade through a shekel brokerage account at a member firm
  • Securities prices are quoted in agorot. One agora equals NIS 0.01 (1/100 of one shekel)
  • The Israel Securities Authority supervises TASE activity, regulates public companies and ETN issuers' disclosures, and supervises mutual funds and investment advisors
  • Market capitalization (excluding ETNs):
    • equities $204 billion
    • bonds $208 billion
  • Net international investor’s purchase of equities in 2014: $1.2 billion
  • Daily turnover (including ETNs): $1.8 billion
  • High-tech companies listed: 127 (51 are biomed)TASE logo
  • Total number of securities listed:
    • 471 equity companies
    • 708 government and corporate bonds
    • 616 Exchange Traded Notes (ETN’s)
    • 1,328 mutual funds

Stock PerformanceStock Performance

Israeli stocks have far outperformed Wall Street in the past decade.

Israeli Stock Market and U.S. Stock Market chart TA-25 and International Equity Indices

International Economic Organizations

Israel is a member of these leading international economic organizations:

  • World Bank Group
  • International Monetary Fund (IMF)
  • OECD
  • World Trade Organization (WTO)
  • United Nations Organizations
  • United Nations Agencies
  • Regional Organizations
  • Inter-Governmental Organizations
  • Pacific Alliance (observer)

OECD Economic Surveys

Israel 2013 Executive Summary states: "Israel's output growth remains relatively strong, unemployment is at historically low levels, its high-tech sector continues to attract international admiration, and new off-shore gas fields have come on stream." The Survey’s Assessment indicates: "Israel's output growth has been impressive, considering global economic weakness, and the output gap is down to zero in contrast to much of the OECD area. The unemployment rate is at a 30-year low, and labour force participation has been rising steadily. Furthermore, new natural gas fields have provided an additional boost to GDP in recent quarters. Substantial public spending cuts and revenue-raising measures legislated in the latest government budget are set to bring fiscal balances back on target for this year and next."

Sources: Bank of Israel, Tel Aviv Stock Exchange, OECD, Israel Central Bureau of Statistics, Israel Ministry of Finance, International Institute for Management Development (IMD) Global Competitiveness Yearbook 2014, World Economic Forum (WEF) Global Competitiveness Report 2014-2015), TradingEconomics.com, Bloomberg Global Innovation Index (2015)

 

Comments 3

  1. shalom
    I took your advise and called I.B.I . the rep of IBI spoke to me , took my email and sent me a contract , i went with it to the Israeli ambassy spend there my day noterizing the 50 page contract , went to the post office paid $49 and trucked the pacage for a week
    finely it reached shalom tower , i just called to ask for bank info and I ben told that IBI management have a new policy not to serve us citizens . please update your website
    with correct info .
    thanks
    haim mizrahi
    6463303828

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