The Rise of Israeli Defense Equities in a Changing Global Security Order

Israel’s defense sector has moved from a specialized corner of the local market to one of the most closely watched areas of the Tel Aviv Stock Exchange. As global security needs evolve, Israeli defense companies are attracting growing investor attention because their technologies are not theoretical — they are being tested, refined, and deployed under real-world conditions.

What Is Driving the Rise of Israeli Defense Stocks on TASE?

The short answer is sustained conflict combined with global demand for proven systems. Over the past two and a half years, Israel has faced continuous security pressure across multiple fronts, from Gaza to Lebanon and tensions involving Iran. This has translated into a real-time testing ground for military technology. Financial markets tend to reward visibility, and Israeli defense companies now offer exactly that: systems that are not theoretical but operational.

The Tel Aviv Stock Exchange has reflected this shift. A dedicated defense index, launched just six months ago, has already recorded gains of 31%, with early performance suggesting investors view the sector as structurally supported rather than cyclical. This is not a short-term spike driven by headlines. It is a repricing of companies whose products are now central to modern warfare.

At a broader level, global defense spending has been rising following the Russia-Ukraine war, and war in the Middle East has added another layer of urgency. Israeli firms sit at the intersection of these trends.

Recent reporting highlights that global demand for Israeli defense systems has accelerated meaningfully, with exports reaching record levels as countries prioritize technologies that have been tested in real-world conditions. In particular, systems related to air defense, drones, and battlefield intelligence have seen heightened interest from Europe and other regions responding to evolving security threats.

This growing demand reflects a broader shift in procurement priorities: governments are increasingly favoring solutions that demonstrate proven performance under operational stress. Israel’s defense sector, shaped by continuous real-time deployment, is therefore gaining strategic relevance beyond its domestic market.

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Which Israeli Defense Companies Are Listed on the Tel Aviv Stock Exchange?

Israel’s defense ecosystem includes both large, globally recognized firms and smaller, specialized companies. The larger players provide scale and stability, while smaller firms often deliver niche technologies tied to emerging battlefield needs.

Here are several publicly traded defense companies listed on the Tel Aviv Stock Exchange:

Elbit Systems stands out as the anchor of the sector. This company provides a benchmark for international demand. Meanwhile, companies like NextVision represent the newer wave, focused on components critical to unmanned systems.

This mix gives investors exposure across the value chain, from full-system integrators to specialized component suppliers.

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How Have Recent Conflicts Increased Demand for Israeli Defense Technology?

Modern warfare has shifted away from large, conventional engagements toward distributed, technology-driven systems. The wars involving Israel over the past two and a half years have accelerated this transition. Drones, precision-guided systems, and layered air defense have moved from supporting roles to central pillars.

Israeli technology has been shaped directly by these conditions. Systems such as Iron Dome and more advanced layered defense solutions are not just theoretical frameworks; they have been deployed repeatedly under real threat conditions. This is relevant for procurement decisions abroad. Governments are less interested in untested systems and more focused on what works under pressure.

There is also an economic dimension. Analysts have increasingly highlighted the “cost asymmetry” problem: cheap drones or rockets forcing defenders to use expensive interceptors. Israel’s development of lower-cost solutions, including laser-based interception systems co-developed by Elbit Systems, directly addresses this imbalance.

The result is a shift from domestic necessity to global adoption. Technologies refined in Israel are now being integrated into defense strategies in Europe, North America, and parts of Asia.

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Why Are Investors Paying Attention to Smaller Israeli Defense Companies?

The larger Israeli defense players are already well known and often valued accordingly. The real volatility — and potential upside — may sit with smaller companies.

Recent market reactions illustrate this phenomenon clearly. During periods of escalation, smaller defense stocks have posted sharp one-day gains, in some cases exceeding 10%–20%. Companies such as Aerodrome, Third Eye Systems, and others tied to drone and surveillance technologies have reacted quickly to geopolitical developments.

Next Vision Stabilization System supplies sophisticated camera systems, including infrared cameras, that can be mounted on drones

This behavior reflects two realities. First, smaller firms are often more directly exposed to specific technologies, such as UAV components or tactical communications. Second, they remain underfollowed, meaning price discovery can be abrupt.

However, this cuts both ways. Some of these companies have also experienced significant drawdowns over the past year. In this segment of the market, volatility is not an aberration but a defining characteristic — one that demands careful positioning rather than passive exposure.

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How Can Foreign Investors Access Israeli Defense Exposure?

Foreign investors have several routes into the Israeli defense sector, and the choice depends on their level of sophistication and access.

Currency is also a factor. The shekel’s strength over the past year — and really over the past 25 years — has significantly amplified returns for foreign investors, though currency gains cannot be guaranteed for future investors.

One path is through a few dual-listed companies such as Elbit Systems, which trades on Nasdaq. This removes direct exposure to Israeli currency because the shares are traded in U.S. dollars, while still providing exposure to Israeli defense demand. Unfortunately, only a small number of Israeli companies in the TASE defense index are dual-listed on both TASE and Nasdaq.

For those with access to TASE directly — and who desire shekel exposure that may or may not increase returns — the new TASE defense index offers a diversified entry point. It aggregates companies across the sector, reducing single-stock risk.

But not all companies in this sector have equal fundamentals or equal promise. Another method for gaining Israeli defense exposure, together with shekel exposure, is through a managed investment account with an Israeli-licensed portfolio manager or a U.S. SEC-registered investment adviser firm. Wise Money Israel is licensed locally in Israel and registered with the SEC, and performs its own fundamental analysis on Israeli companies, including defense companies, when investing on behalf of clients in what it believes will provide the client a better risk-adjusted return.

Another indirect route is through global defense ETFs, some of which include a small number of Israeli companies as part of broader international holdings. Many of these ETFs limit the inclusion of Israeli defense firms when they have geographic mandates, such as U.S.-domiciled-only exposure. Therefore, buying such an ETF may dilute the specific exposure to Israeli defense firms.

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What Risks Should Investors Consider Before Investing in Israeli Defense Stocks?

The risks of investing only in this volatile sector are real and, if ignored, expensive. Defense spending is ultimately political. While current trends point upward, they are not guaranteed. A shift in diplomacy, a de-escalation in key regions, or budget reprioritization could slow procurement cycles more quickly than markets expect.

Valuation is another pressure point. After a strong run, parts of the sector are no longer attractively priced. Investors buying into momentum without a clear view of earnings durability risk paying for growth that may already be reflected in the share price.

Concentration risk also remains. Much of the sector’s demand is tied, directly or indirectly, to geopolitical instability. If tensions ease materially, order growth may not collapse, but it could normalize, and markets tend to reprice that shift quickly.

Smaller companies add a further layer of risk. Many rely on a narrow customer base or a limited number of contracts. Execution missteps, delays, or technological shifts can have disproportionate effects on their valuation.

These risks do not invalidate the investment case, but they do require discipline. In practice, they are best managed through active oversight. A portfolio manager with a clear mandate to anticipate emerging economic and financial trends — rather than react to headlines — can adjust exposure, rebalance positions, and differentiate between structural growth and temporary enthusiasm.

Conclusion

Seen in that light, the broader investment case becomes clearer. The rise of Israeli defense stocks is not simply a reaction to recent conflict. It reflects a deeper shift in how military capability is developed, tested, and ultimately procured. Systems proven under real conditions are gaining relevance far beyond Israel, and financial markets have begun to price that reality.

For investors, the opportunity is clear but not without complexity. This is not a passive story. It requires selectivity, an understanding of geopolitical drivers, and a willingness to navigate volatility. Those who approach the sector with discipline rather than enthusiasm may be better positioned to participate in its long-term potential.

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IMPORTANT DISCLOSURES & RISK INFORMATION

This content is provided for educational and informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any securities. Investing in international markets, including Israeli securities and defense-related sectors, involves material risks, including but not limited to market volatility, geopolitical risk, sector concentration risk, liquidity risk, currency risk, and the potential loss of principal. Past performance is not indicative of future results. Wise Money Israel does not guarantee any specific outcome, return, or profit. Any references to specific companies are for informational purposes only and should not be understood as a recommendation to buy, sell, or hold any security. Individuals should consult with a qualified financial advisor, tax professional, and/or legal counsel before making any investment decisions. Diversification does not necessarily ensure a profit or protect against loss. © 2026 Wise Money Israel. All rights reserved.

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The prominent credit rating agency Fitch Ratings released recently an overview of Israel's economic outlook for investors indicating a potential upgrade of the country’s credit rating from its current A+ status.
According to the report, the near-term outlook is displaying promising signs of improvement, despite recent market volatility and ongoing geopolitical tensions. The credit agency suggests that Israel's return to budget deficits from previous surpluses will not hinder the further reduction of Israel’s general government Debt to GDP ratios. Before 2022, Israel had a relatively low ratio of 68.9% (U.S. has a staggering ratio of 129% - even higher than Cuba), but Israel budget surpluses in 2022 decreased the country’s debt ratio even further: to 61.6%. Fitch Ratings projected a further reduction in Israel’s Debt to GDP ratio to 57.9% by 2024, which could potentially lead to positive rating action, such as a rating more in-line with “AA’ peers’ ratios.

In fact, Fitch expects the deficits over the next three years to be narrower than those experienced prior to the COVID-19 pandemic. Israel’s GDP grew in 2022 by 6.4%. Although weaker housing and stock markets are anticipated to contribute to a decline of approximately 2.3% in revenue in 2023, Israel's government Debt to GDP ratio is expected to continue its downward trajectory due to robust nominal GDP growth projected at an average of 6.9% over the next three years.

While Israel faces ongoing internal social and political tensions, the passage of Israel’s biannual government budget provides near-term political stability and government effectiveness. However, Fitch Ratings cautions that the advancement of certain policies favored by the governing coalition could exacerbate these strains and potentially influence the country's sovereign rating. In particular, judicial reform has been identified as having the potential to negatively impact Israel's credit profile, depending on its effects on governance indicators and policy outcomes.

As to Israel's capital markets, recent security related developments caused a disparity between economic reality and the capital market’s performance. After an increase of 6.6% between mid-April and mid-May while the coalition and opposition parties began discussing possible compromises, Israel’s stock market experienced a decline of 5.3%, signaling a return of fear among investors after a period of positive momentum. This volatility was primarily driven by security-related statements regarding the Iranian situation made by Army Chief of Staff Herzi Halevi during a conference in Herzeliya last week.

However, not everyone sees the situation as gloomy as some media outlets are trying to portray. In fact, one of the leading Israeli banks, Discount Bank, has recommended to its clients to start gradually increasing exposure to the stocks listed on the Tel Aviv Stock Exchange. The bank cites a reasonably stable economy, relatively cheap pricing of equities, and the belief that some potential risk events, such as the approval of the budget, have already passed. Based on the bank's assessment, the Price/Earnings ratio of the large-cap TA-35 index is 22.1% below its historical median.

Chart: Gap of Weighted Average of Expected Price/Earning vs. the Index’s Historical Median (globes.co.il)

In terms of the local macroeconomic situation, Discount Bank assesses it as reasonable and relatively good in certain parameters. Israel's GDP growth in the first quarter stood at 2.5%, surpassing market forecasts. Positive contributors to this growth include decreased imports, increased service exports, and higher consumption. While some segments may experience a slowdown, the overall data remains reasonably positive despite rising interest rates.

Therefore, the recent developments are giving us reasons to be optimistic. Based on the Israel's near-term economic outlook, there are clear signs of improvement despite market volatility and geopolitical tensions. The projected reduction in the government Debt to GDP ratio, stable governance indicators, and recommendations from financial institutions such as Discount Bank to increase exposure to the local stock market highlight the country's positive economic prospects. While challenges remain, Israel's reasonably stable economic situation and relatively cheap pricing in the stock market position Israel as an attractive investment opportunity.

Sources: Globes, Fitch Ratings

Photo: Credit to Gerd Altmann (geralt)

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You may be watching the current financial situation with concern, due to growing inflation, tremendous money printing, and talk of the U.S. dollar (USD) potentially losing its world reserve currency status that it has had since 1944. Since January 2020, the U.S. has printed nearly 80% of all USD in existence.

It is now time to take proactive steps to protect yourself by considering transferring more USD (or other currency) to your Israeli shekel-based investment account. This move that will help diversify your investments from a currency perspective, and can hedge against the eroding value of the dollar.

As of the date of this article, given that the annual inflation reported is 8.5% in the United States, 7.8% in the European Union, 7.3% in Germany, 7% in the U.K. and 6.7% in Canada, Israel’s relatively low inflation rate of 3.5% (currently) as of is seen as a safe haven to slow the quick erosion of hard-earned gains.

But, due to the U.S. Federal Reserve’s recent interest rate increase to slow the acceleration of U.S. inflation, as of the date of this article, the USD has increased 8.1% in the past 15 currency trading days against the Israeli shekel (NIS). This temporarily has slowed the long-term trend of a weakening USD, while the long-term trend of the dollar devaluation continues (the shekel’s value increased 46% over the USD over the past 20 years - as of the date of this article).

This current situation presents you a unique opportunity to transfer USD (or your currency) and convert to NIS now while this erosion has slowed temporarily. These opportunities are rare and short-lived. As we watch the global markets, our firm advises to take action before the long-term trend resumes.

Please contact us for information how to transfer your currency to an Israeli investment account now.

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Israel’s credit rating has risen consistently over the past 15 years in all three agencies, moving over time from A2 in the year 2000 to A1 (Stable) in 2008 with Moody’s and retaining that rating since, from A- in 2007 to A+ in 2011 with S&P, and Fitch increasing Israel’s ranking from A- (negative) in 2001 to A+ (Stable) this month.

The credit rating of a nation has a big impact on the country's borrowing costs, essentially how it can raise capital both from other sovereign nations and also from investors, whether institutions or individuals. The credit rating indicates the risk level associated with the nation’s investing environment, taking into account various factors including the economic, political and social climates. The credit rating also effects the strength of the local currency in relation to foreign currencies.

There are several main factors that led Fitch to issue their recent upgrade of Israel’s credit rating. These factors have been consistently strengthening over recent years and are positively impacting Israel’s economic forecast for the coming years:

1. Israel’s strengthening external balance sheet
   Fitch first pointed out Israel’s increasingly positive Current Account balance. The current account is an important indicator about an economy's health. It is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers. In other words, it indicates if there is more foreign currency flowing in from export and aid or going out from import and payments. Israel has returned annual Current Account surpluses each year since 2003, breaking a record in 2015 with 4.6% of GDP.

2. Israel’s continually decreasing Government Debt to GDP ratio
   Since the mid-late 90’s, Israel’s debt to Gross Domestic Product (GDP) ratio has been steadily decreasing. Despite a periodic rise in the early 2000’s, the ratio has decreased to a favourably low percentage reaching a record low of 64.8% in 2015, revealing how Israel’s economy is producing more services and goods sufficient enough to pay back its debts without incurring more. In comparison the U.S. Government Debt to GDP ratio that has grown rapidly since 2007, eventually reaching over 104% in 2015.

Israel’s GDP average for 2011-2015 has slowed to 3.1% from 4.5% during 2004-2011 resulting from a number of factors, including the slow global economy that Israel is highly dependent upon. By comparison, U.S. average GDP during 2011-2015 was only 1.9%. Looking ahead, In June 2016 the Bank of Israel presented its forecast for the remainder of 2016 and into 2017. The research department forecasts that Israel’s GDP is projected to increase by 2.4 percent in 2016 and by 2.9 percent in 2017. For comparison sake, the projected growth of GDP in the U.S. will be 2.4% in another 12 months and around 2.1% around 2020. Israel’s rate of inflation over the next year (ending in the second quarter of 2017) is expected to be 1.0 percent. The Bank of Israel interest rate is expected to remain at its current level of 0.1 percent during the coming year, and to begin rising at the end of 2017.

Fitch also noted that “Israel benefits from high financing flexibility. It has deep and liquid local markets, good access to international capital markets, an active diaspora bond programme, and US government guarantees in the event of market disruption”.

3. Israel’s natural gas sector discoveries and development
   Israel’s recent natural gas discoveries and development off the Mediterranean coastline have propelled Israel into a regional and perhaps even global energy player. These natural gas fields are further positively influencing the Current Account balance by heavily reducing the need to import natural gas, one of the main energy sources used to fuel Israel’s power stations. Instead, Israel is already consuming its own natural gas flowing through underwater pipelines from the Tamar gas field directly into the stations. Furthermore, Israel is preparing to export this natural resource to other nations, including neighbouring Egypt in an already Israeli-approved deal that will add billions of USD to Israel’s current account in the coming years. In July 2016 the Israeli Government gave the go-ahead to develop the larger Leviathan gas field, and although final regulatory and investment decisions need to be finalized, a number of supply contracts have been agreed in preparation for an initial production date in 2020.

In summary, Israel’s well-developed institutions and education system will continue to cultivate a diverse and advanced economy while human development and the Israeli business environment also promote innovation, particularly in the high-tech sector. Even despite the political volatility in the region and under the still-relevant threat of war and terror, Fitch’s credit rating upgrade and analysis and is another strong indication to the stability and resilience of the Israeli economy and it being an attractive destination for investors worldwide.

Stefan Silver serves as the Director of Business Development & Operations at Wise Money Israel (WMI), the first licensed Investment Portfolio Management firm in Israel that works completely in English to serve local and international clients. WMI works with hundreds of individuals and organizations from around the globe to invest in Israel’s leading companies and technologies through Israel’s capital market – the Tel Aviv Stock Exchange (TASE).

Stefan holds a B.A.in Economics and Management, and an MBA from Haifa University. Born in Auckland, New Zealand, Stefan immigrated to Israel in 1992 and served for four years in the IDF’s Combat Engineering Corp, including combat experience on the front lines of the Second Lebanon war. He is currently a Captain in the IDF Reserves.

LinkedIn: Stefan Silver

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An enormous number of inventions and innovations have come out of Israel in recent decades, more than from many larger, established nations combined. Israel is shining its light on the nations of the world.

Why are there are so many Israeli inventions? Some hints to this mystery might come from the fact that its population seems to be very creative and entrepreneurial.

Innovation involves change for the betterment of mankind, keen observation, thinking outside the box, systematic investigation and serendipity.

Israel has world-leading innovative companies in the fields of technology, transportation, information and communication, food and agriculture, medicine, surveillance and satellites, water, renewable and alternative energy, and security.

Today we’ll focus on a two areas of Israeli innovation - information technology and self-driving cars, and highlight the companies leading these innovations.

Lightning fast Internet speeds

There’s a new game-changing technology called G.Fast which is capable of providing incredibly fast internet over the wires you already have in your home.

Earlier this month, Israeli semiconductor company Sckipio announced a new G.Fast solution that can deliver both upload and download speeds of 750 megabits per second. That's 50 times faster than the broadband many have in their homes today.

But even that speed will be slow in comparison to the next generation of chips that could come within another year. These will provide double that speed for both upload and download (1.5 gigabits per second), Sckipio said. That's faster than anything Google Fiber offers today.

Previous demonstrations of G.Fast have shown the technology to be capable of 750 megabit download speeds, but upload speeds were significantly slower than that.
Equal upload and download speeds are becoming more important, as new technologies require increasingly fast upload bandwidth. Uploading 4K videos, using virtual reality or playing video games all require super-fast upload speeds to function properly. For example, uploading a 30 second 4K GoPro video would normally take five hours using today’s broadband technology, but using G.Fast, it would take only a few minutes.

Sckipio says the G.Fast technology will debut in the United States in 2016. It won't be available everywhere immediately, but Sckipio said a single phone company could roll it out to the entire country in just four years.

Phone companies are excited about G.Fast, because it allows them do deliver super-fast speeds without having to dig up holes in your yard to do it. Or, if you live in an apartment building, they can use the existing infrastructure to deliver fast speeds without having to rewire the entire building.

Multi-dwelling units like apartments are a particularly attractive target for phone companies. Many of those apartments are currently served by DSL Internet over phone lines. But that old technology is dreadfully inefficient: DSL can lose up to 90% of its speed by the time it gets to your modem. G.Fast loses just 5% to 10% during the same trip.

It also solves a problem of deploying fiberoptic cables everywhere, which was previously the only way to get super-fast internet speeds to customers. Bringing fiber to homes is expensive and time consuming (and sometimes requires a company to dig up your yard). Bringing fiber from the street to just to one home can cost $100,000, according to Sckipio.

By comparison, the boxes on the street that need to be installed to power G.Fast cost about $70,000. And the cost of bringing that to your home is $0, since it connects to the phone lines already installed in your house or apartment.

Founded in 2012, the Ramat Gan, Israel-based company with 50 employees develops award-winning standards-compliant G.fast modems, which offer better performance over existing copper wires by dynamically allocating the bandwidth in each direction in real time (Dynamic Bandwidth Allocation, DBA).

Self-Driving Cars

The race is on to get the world's first self-driving car on the road, and the world's biggest car brands - BMW, Tesla and Audi - have all turned to Mobileye, a cutting-edge Israeli start-up.

13 major car companies are all using the technology developed by Israel startup company Mobileye. The company started as a tiny startup, and boasts the biggest IPO in Israeli history (valued at $5.3 billion).

The native Israeli firm, which makes computer vision software and cameras that help cars avoid accidents, offers systems that include a windshield-mounted camera that takes pictures of what is in front of the driver. The images are processed and, in real time, a small device on the dashboard gives the driver audio-visual warnings.

The tiny camera is designed to prevent death and accidents by interpreting a scene in real time. The camera has its eye on the road when driver’s eyes may not be. The software application links to the steering system, and sounds an alert when the driver does something that may lead to a collision. It identifies cyclists and pedestrians, and sounds an alarm before a collision happens. It can also see speed limit signs and whether the driver is veering out of his lane, the first sign of driver fatigue.

The system allows the driver to make a mistake, but brings their attention quickly back to the job at hand. Australia is currently performing a trial of the system using its government vehicles. The technology can be retrofitted easy to any vehicle.

Now the firm is re-engineering the system to allow the driver to take their hands off the wheel. The key innovations are in the microchips Mobileye develops, and in the algorithms the system uses. “In addition to preventing collisions, the system must sense the road in great detail, including lane markings, curbs, barriers, obstructions, recognize a large vocabulary of traffic signs and red lights, determine cars distances, and be fault-tolerant to a degree unparalleled by today’s driver assistance systems,” says company Co-founder, CTO and Chairman, Professor Amnon Shashua.

One day this technology will likely allow us to take our hands off the wheel, and let a sophisticated computer system that never tires or makes driving mistakes, assist us to arrive safely at our destination.

How can I participate?

Some innovative Israeli companies are investable only via venture capital firms offering tens of millions of dollars to viable startups. But other Israeli innovations are developed by Israeli companies already listed on the Tel Aviv Stock Exchange. Israelis and non-Israelis alike - irrespective of residency and citizenship - may open a shekel-based investment account at Israel’s largest brokerage firms, and invest in these publicly traded companies directly in the Israeli shekel. Individuals, companies, organizations and U.S. retirement accounts may open accounts, enabling them to invest in Israeli stocks, bonds and mutual funds.

Sources: MarketWired, CNN, 9news, Mobileye

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Many investors want to invest in innovative Israeli startup companies before they go public. But some don’t have the high amounts of capital necessary to participate in a venture capital fund, and others don’t want the high risk associated with investing in a small private company with little regulatory oversight and financial transparency. But that all may change soon.

In a recent interview given by the Vice Chairman of NASDAQ, Mr. Proctor describes the strengthening of cooperation between the Tel Aviv Stock Exchange (TASE) and the U.S. NASDAQ stock exchange. The Exchanges are discussing creating an Israeli stock exchange to allow easily investment in Israel startups on the TASE.

The recent interview in Israel was conducted by Ido Asayag from Funder, one of Israel's economic newspapers. Meyer (Sandy) Procter is the Vice Chairman of the NASDAQ, and is responsible, among other things, for the working relationship between the NASDAQ and other stock exchanges around the world. He is also advisor to NASDAQ's senior management group on various subjects including the financial industry, national and international regulation. Sandy joined NASDAQ in 2008 after serving as Chairman and CEO of the Philadelphia Stock Exchange (PHLX) and successfully led the restructuring of that stock exchange and its merger with the NASDAQ stock exchange.

Question: Sandy, thank you for honoring us on a visit to Israel. What brings you to Israel?

Answer: I come to Israel often for personal reasons (I have family in Israel) and business. This time I came to Israel to examine cooperation between NASDAQ and TASE, following a meeting of the heads of the NASDAQ with the Minister of Finance, Mr. Moshe Kahlon. The Minister of Finance emphasized to us the great importance he sees in globalizing the Israeli capital market, and in order to keep the center of operations of technology firms in Israel instead of transferring their operations abroad. He expressed concern over the phenomenon that many Israeli companies are literally exported abroad, and as a result the State of Israel loses jobs and growth. The minister spoke of the importance of the Tel Aviv Stock Exchange as the generator of growth as it fulfills its purpose in the Israeli economy, which is to encourage competition with banks over sources of capital, and to contribute to economic growth. Mr. Kahlon encouraged the examination of cooperation to set up a joint enterprise with the NASDAQ stock exchange.
I believe that cooperation between the Exchanges can be a game changer and change the current situation in the Israeli capital market. In my estimation, there is now a special window of opportunity to jointly promote  a new market that meets the needs of growth companies and technology companies that are in the stages prior to a possible listing on the NASDAQ market. I believe this new market can be an attractive and unique market for Israeli companies, and in particular growth companies and high-tech companies, which would increase their visibility to global investors, who are already showing great interest in Israel. The high-tech industry in Israel is very important to the Israeli economy, and therefore there is great importance to diversifying its funding sources. The new common platform to both exchanges can facilitate the existence of an exciting market which will contribute to the growth of the Israeli economy, especially if we can help them refrain from an "exit" event too quickly, and continue to develop in Israel as international companies.

Question: I understand from your words why such a market is important to the Israeli economy. Can you explain to us why this is good for NASDAQ?

Answer: The NASDAQ stock market is a competitive stock market that operates in a very  challenging environment. We are always looking for new opportunities and further growth engines. Given the fact that almost 20% of the foreign companies listed on NASDAQ are Israeli companies, NASDAQ certainly sees Israel as an important growth potential for the future. A simple examination of the number of IPOs on the NASDAQ market in 2015 shows that various fields of technology are very prominent among these Israeli companies on the NASDAQ, and the proportion is very large compared to other capital markets around the world. Israeli technology companies are very interested us, and I feel proud to be part of the Israeli economy with about 90 Israeli companies whose shares are listed for trading on the NASDAQ market. My vision is to fill in the gaps through a new market which would be attractive to Israeli firms that do not today list on the the TASE nor the NASDAQ. The new market could enable Israeli companies to take advantage of both worlds: easier access to more sources of capital, an internationally-renowned stock exchange, dual listing of securities on the TASE and NASDAQ, and the use of NASDAQ's technology which is familiar and friendly to the investor. All these will facilitate the attraction of more investors from Israel and abroad and encourage liquidity on the TASE.

Interviewer: You're touching one of the critical points in terms of the Israeli market. Over two years ago I initiated the establishment of two committees: the Liquidity Committee and the R&D Committee. Regarding Research and Development companies, in the coming weeks a law will be discussed in the Knesset Finance Committee which will ease reporting requirements to allow English reporting, which would report using U.S. GAAP standards, and allow tax breaks designed to make the capital market in Israel, and especially the Tel Aviv Stock Exchange, more attractive for them. The Liquidity Committee recommended a series of recommendations and foremost among them is restructuring the Israeli stock market similar to other global markets to make them more effective and more attractive. At the same time, TASE CEO Mr. Yossi Beinart and TASE Chairman Mr. Amnon Neubach are promoting new reforms to encourage liquidity, reducing commissions and the creation of appropriate infrastructure for international cooperation, such as a joint venture with the NASDAQ stock exchange.

Question: Why do you think that the completion of these steps, together with a joint venture with NASDAQ, are important to Israel?

Answer: Israel is a country of dreams, entrepreneurship and innovation. But the "start-up nation" isn't succeeding to become the "scale-up nation". It is a fact that many companies have chosen the path of "exit" (such as M&As) in the early stages relative to the global competition, and do not fulfill their potential of growth and profitability. Some of the reasons for this is the desire of developers to see cash from their initiative. The new market is designed to precisely meet this need  - to enable entrepreneurs to obtain sufficient financing so that they can grow and manage their companies. Financial support and the financing of these companies in their later stages (late stage) will serve everyone: entrepreneurs, investors, angel investors and venture capital funds alike. This will also help Israel's economy in general as well as facilitate employment in Israel.

Question: One of the important questions that arise in the discussion on the future of the Israeli capital market is the problem of the high fees of Israeli investors in the capital market, especially in comparison with developed capital markets like the U.S. What do you think could have an impact on the Tel Aviv Stock Exchange trading fees through the cooperation with the NASDAQ?

Answer: I expect that our cooperation will lead to a significant reduction in commissions. But I want to emphasize that the drop in fees should not be because of this regulatory provision or that. I come from the United States where the business culture is to encourage competition and the war to the heart of investor, by reducing the costs of trade. I expect that cooperation, and the process of opening up the stock market to new Stock Exchange members through which transactions are executed on the TASE, from Israel and abroad, will lead to almost immediate results of increasingly fierce competition among the TASE member firms that will reduce the costs of trading. This is what happened on the NYSE, NASDAQ and other stock markets after undergoing similar processes.

Question: In 2008, the crisis in international capital markets also affected the Tel Aviv Stock Exchange and led to a decline in trading volumes on the TASE. Despite the improvement in trading volumes since, volume is still low. What have you done to tackle the problem of the decline in trading volumes in the U.S. and what do you suggest we do?

Answer: The phenomenon of the decline in trade volumes is correct for all capital markets, especially in Western capital markets. This was the case in the U.S. and on the NASDAQ. We at NASDAQ, among other things, expanded the supply of services that we offer, we increased our profit centers, including through various collaborations with some of the world's stock exchanges. In today's globalized world, these collaborations are very important  because of the need to increase investors' access to different markets. There is intense competition between stock markets and the decline in commissions for investors increased demand for investor-friendly technology and cheaper access to exchanges around the world. I am here because I believe that there is great importance to cooperation between the Tel Aviv Stock Exchange and NASDAQ.

Question: A few months ago, in one of our meetings on the technology industry in Israel, we spoke both about the high-tech industry in Israel and agreed that it considered, unfortunately, a "candy store". In our conversation, we talked about Israel being a nation of start-ups that supports R&D, training young people in the Army and elsewhere, and then sell their startups abroad. These startups are the "candy" for investors and it seems that investors around the world consider them low-cost "sweets". Can you expand on that?

Answer: I meant that the phenomenon of the "exit" is concerning from the standpoint of the Israeli economy. Its not for nothing that Israel is called the startup nation. It has the world's second largest concentration of innovation after the Silicon Valley. Like any market of growth companies, some develop and some make an early exit, and this is natural. But what is different in Israel is that most companies are sold to foreign investors too soon, and a new generation of new large companies isn't grown. Each such "exit" detracts from economic growth in the Israeli economy because these companies prevent themselves the possibility of their development as international companies located in Israel. These companies are seeking financing in the early stages when they are not yet ripe to raise capital on NASDAQ, and therefore they are sold as "candy at cheap prices." I believe that cooperation between our Exchanges can be an excellent solution for many Israeli companies. I also believe that the new R&D law soon to pass the Israeli legislature - thanks to the efforts of the Ministry of Finance - will allow, among other things, corporate reporting in English, reported under U.S. accounting rules and will engender tax breaks. These are very important to the success of the public offering of Research & Development companies in Israel.

Question: In an interview with Globes in 2009, you said there would always be a market for new technology. How do you explain the fact that the State of Israel - the startup nation - cannot leave these innovative projects in Israel?

Answer: This is not a simple question. I think it's related to the fact that the capital market in Israel is still evolving. There are good companies in Israel, but the business environment is still in initial development stages, that require, among other things, companies to develop appropriate skills for technology companies. Thus, for example, the field of analysis of high-tech companies in the first-stage is not sufficiently developed compared to that in the U.S. This is one reason I believe that cooperation between the Exchanges can be a motivating factor for the development of these skills, attracting international players such as underwriters, analysts, and global investors, and be a key for real change for the rapid expansion of the business environment. All of these factors are likely to cause companies to get better pricing estimates and stop the phenomenon of companies being sold too early and not remaining in Israel to develop into international companies.

Question: Based on your experience, your role at NASDAQ, and your expertise in international stock markets, you can detail for us the potential of the Tel Aviv Stock Exchange, and the challenges it faces?

Answer: The main challenges are: to open the Tel Aviv stock market more to investors in the world, to change the ownership structure of the stock market, allow the Israeli stock exchange to cope well with heavy competition with stock exchanges in the modern world, to increase the number of local and foreign members of the Israeli stock exchange, to use user-friendly and available technology, increase liquidity, create regulatory conditions similar to the world, such as the U.S. Jobs Act and the R&D Law, in order to attract more companies to raise capital on the stock exchange, to add financial instruments, and more. I believe that if the cooperation between the Tel Aviv Stock Exchange and NASDAQ begin to take shape, as I hope, these challenges can be met.

Question: How do you propose to do that?

Answer: The most important change, which to the best of my knowledge is being examined by the Israel Minister of Finance, is the globalization of the TASE. Such a change was made in all the world's stock markets the past two decades, including the NASDAQ, and is unavoidable due to fierce competition between stock exchanges in the world. I myself led the Philadelphia Stock Exchange in such a change. A large part of the problems on the TASE must face are similar to those we faced with the PHLX, including dominant controlling shareholders, liquidity shortage and operational inefficiency. The change in the Philadelphia Stock Exchange increased the number of members of the stock exchange, increased the volume of operations, and liquidity increased significantly, which led to cooperation with NASDAQ. The PHLX Stock Exchange today is effective and much more interesting [to investors].

Question: Three years ago the Israel Securities Authority initiated a "road map" that includes the easing of supervised entities and the removal of obstacles to market development. Among the reliefs were the extension of shelf registration from two years to three years, a waiver on iSOX (Israeli Sarbanes Oxley regulation and compliance) for small and medium-sized entities (SMEs), easing of reports requirements, shortening of reports, and certain exemptions to corporate governance. All of these were approved. In addition, in the coming months we will complete the legislative exemptions for new issues, reliefs for R&D firms, the providing of additional relief for SMEs and more. However, it has often been suggested that general regulation, and regulation of the capital market in particular, is to blame for the low amount of IPOs due to over-regulation since 2008. What do you think about that?

Answer: First, I hear that argument also in the United States. In fact, I hear it in all the world's capital markets where I travel. I'm a big believer in the importance of quality regulation. I also believe that it is impossible to ignore these claims and see what can be done. There needs to be regulation balanced with uncompromising enforcement. I know that the Israeli Treasury Department is pushing for such exemptions for SMEs, and other technology companies. These measures are correct and desirable, and such steps are being made also in the rest of the world, including in the United States.

Question: Any last words?

Answer: I believe in the Israeli economy, in the excellent people that are here, and in the amazing companies that are developing here. I'm excited about the possibility of collaborating with Israel.

Mr. Sandy Proctor from NASDAQ with Chairmain of ISA Professor Shmuel Hauser

Israel Securities Authority responds

Chairman of the Israel Securities Authority Professor Shmuel Hauser's response: Sandy, this is good news for us. I am convinced that it is a window of opportunity for making the TASE an international financial center for technology companies.

Source: Funder.co.il

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Investing in Israeli stocks and bonds is done on the Tel Aviv Stock Exchange (TASE), Israel's single national exchange, though accounts at Israeli brokerages and banks. This is where Israeli corporations raise capital to finance investments and activities, and where the government bring the public into its companies as they are privatized. The state-of-the-art exchange is also home to the local investment community and securities sector.

Both Israeli and non-Israeli investors, from any country, may invest on the TASE online, and in English.

History of the TASE

Local trade in securities began in the 1930s, years before the formation of the State of Israel. Trade was carried out through the Exchange Bureau for Securities, founded by the Anglo-Palestine Bank (which became Bank Leumi Le-Israel) in 1935.

With the formation of the State of Israel in 1948, a pressing need arose to formalize trade in securities. In September 1953, a number of banks and brokerages joined forces and established the Tel Aviv Stock Exchange.

Since the mid-1990s the Tel Aviv Stock Exchange (TASE) has been adapting to meet the standards of the most advanced exchanges in the world. Physical trading floors, long abolished, have been replaced by a computerized system.

Structure

The TASE is a private company limited by guarantee. It is owned by its members, both banks and non-banking corporations such as brokerages, through which anybody may trade in the securities listed on the exchange. Trading is carried out between TASE members on behalf of their customers. The TASE operates under a license granted by the Minister of Finance. The Israel Securities Authority supervises the TASE’s activity.

TASE by the Numbers 

• Total Market Capitalization: $515 Billion
• Daily Trading Volume: $1.8 Billion
• 3-year Israeli Stock Performance: 37% (General Share Stock Index, 2013-2015)
• Mutual Funds: 1,386
• Stocks: 460
• Corporate Bonds: 600
• Government Bonds: 45
• Net International investors purchase of equities: $1.6 billion
• High-tech companies listed: 130 (55 biomed)
• Exchange Trade Notes (Funds): 638

Trading

Stock trading monitor

Trading of securities occurs every Israeli business day: Sunday-Thursday, between 9:00 a.m. and 5:35 p.m. Trading is divided into distinct phases of trading, with specific rules: pre-open, opening, continuous trading, pre-closing and closing auction. Market Makers began working on the TASE in 2003. Trading is performed via TASE member firms (banks, brokerages, insurance companies), who transmit orders to the central exchange on behalf of their customers. TASE members’ central computers are connected to the trading computer, so that branch employees can transmit orders online. Most TASE members enable their customers (investors) to transmit trading orders via the Internet and through other computerized means, in English or Hebrew.

Survivability and Backup

Extensive efforts have been invested in planning and constructing the TASE’s computer system, in order to ensure that it is always available for TASE members to transmit their customers’ orders quickly and efficiently, and to provide service without malfunctions and interruptions.

The TASE has established a sophisticated survivability structure for its computerized systems as well as the communications and electrical networks serving their system. The backup structure includes a “hot backup” facility located off-site, at a distance from Tel Aviv, at which trading and clearing can be carried out in the event that they cannot be performed on TASE premises.

Order Size

The minimum order size is the smallest trading unit in securities on the TASE. In equities, the minimum is one share; in warrants, one trading unit of a warrant; in convertible bonds, one NIS par value.

Circuit Breakers

As in all major exchanges around the world, when necessary, the Tel Aviv Stock Exchange exercises "price monitoring" and "circuit breaker" mechanisms in order to mitigate volatility on a given trading day. When the Tel Aviv leading stock index (Tel Aviv-25) fluctuates sharply, opening trading is postponed or trading is halted, as applicable.

Order Types

The following types of buy and sell orders may be submitted:

• Market orders (MKT) – A market order is an order submitted without a designated price limit
• Limit orders (LMT) – A Limit order is submitted with a stipulated price limit
• Limit-at-Opening orders  (LMO) – A Limit-at-Opening order is submitted with a stipulated price limit. A LMO order, or part of it, which is not executed during opening trading is automatically cancelled.
• Stop-Limit orders (STL) – A Stop-Limit order is a Limit order submitted with a condition attached
• Iceberg orders (ICE) – An Iceberg order is an order submitted in 3 portions for execution: the total volume, the first peak and an additional peak designated for display
• Fill or Kill orders (FOK) – A Fill or Kill order is a Limit order for full immediate execution. An order not executed in full or immediately is automatically cancelled and is not listed in the order book.
• Immediate or Cancel orders (IOC) – An Immediate or Cancel order is a Limit order for immediate execution, even if the execution is partial. An order, or part of it, which is not executed immediately is automatically cancelled and is not listed in the order book.
• Limit-at-Closing orders  (LMC) – A Limit-at-Closing order is submitted with a stipulated price limit,. A LMC order, or part of it, which is not executed during closing trading is automatically cancelled.

Financial Products

The Tel Aviv Stock Exchange offers a wide variety of investing options. All are traded electronically online. An interesting feature of the TASE is that Israeli corporate and government bonds, which have a 1 NIS minimum, are all traded online with small spreads and low commissions. This compares favorably to the U.S. market, where bonds are traded over-the-counter, incurring large spreads (hidden fee), high broker commissions, and high minimums. The following is a list of investment choices in Israel:

• Stocks
• Convertible Securities
• Fixed Income
  • Corporate Bonds
  • Government bonds
  • Structure Notes
  • Certificates of Deposit
• ETNs
• Mutual Funds
• Treasury Bills
• Index Options
• Stock Options
• Futures
• Currency Options
• Derivatives

Types of Listings

The following types of securities are listed on the Tel Aviv Stock Exchange:

• Initial Public Offering (IPO)
• Follow-on Offering
• Dual Listing (usually with Wall Street exchanges - NYSE, NASDAQ or AMEX - or on the London Stock Exchange)
• Private Placements

Regulation

Israel’s single capital market exchange is strictly regulated by the following bodies:

• Bank of Israel
• Legislation: the Knesset
• Israel Securities Authority
• Ministry of Finance
• TASE rules and Regulations

Sources: TASE, Bank Leumi: data as of February, 2016

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Robotic technology holds great potential for performing spinal surgery and advancing neurosurgical techniques. Several spinal robotic systems have proven to be safe and reliable in the execution of tasks on a routine basis, and are commercially available. Mazor Robotics, an Israeli medical device company and manufacturer of robotic guidance systems - with its international headquarters in Caesarea and traded in shekels on the Tel Aviv Stock Exchange - is positioned to fundamentally alter the paradigm of complex spinal surgery through an integrated, robotic platform called “Renaissance”. Complex spinal surgery is performed through an integrated, robotic platform, and therefore minimally-invasive.

Robotic Imaging System

The only imaging-based surgical guidance system cleared by the United States Food and Drug Administration (FDA) for spine and brain surgery, the company's Renaissance Guidance System transforms spine surgery from freehand procedures to state-of-the-art procedures, increasing both accuracy and favorable clinical outcomes. The clinically validated technology has been successfully used in both routine and complex cases in thousands of spinal procedures worldwide – including over 50,000 implants. Surgical treatment of the spine requires planning and precision crafted around each patient’s unique challenges and anatomy – a process Mazor streamlines with their robotics system. The system may be used for correcting spinal deformities, brain procedures, oncology biopsies and tumor resections, and others medical procedures demanding computer accuracy.

There are more spinal fixation surgeries annually than hip replacements and partial knee replacements combined. There are many existing clinical challenges in spinal surgery. Current spine procedures fail to provide predictable results across various case complexities, levels of invasiveness and surgeon’s level of experience. Current surgical procedures require a significant learning curve, incur an increased risk for misplacement and mistakes, and can require a restricted or even no line-of-sight access to the anatomical site.

The 3D Revolution

Current procedures depend on two-dimensional imaging to orient the doctor in three-dimensional surroundings. These make current spinal surgeries complex. According to the company, many surgeons have praised the 1.5 mm accuracy mechanical guidance provided by Renaissance, acknowledging the technology makes complex surgeries less challenging. Using Renaissance’s intuitive interface, surgeons can plan operations in a virtual 3D environment, creating a surgical blueprint for better accuracy.

Mazor’s spinal robotic solution make spinal procedures easier, requiring a much shorter learning curve for all doctors. While surgeon controlled, the robotic, computer-driven procedure increases accuracy, precision and predictability. Favorable surgical outcomes are reproducible, and procedure costs are reduced. Also, intra-operative exposure to radiation is minimized.

Increased Accuracy

Using innovative surgical robots enhances the surgeon’s performance in spinal surgery by increasing placement accuracy and reducing the neurologic (nerve) risk. The robotic system helps spinal fusion surgery where surgeons realign deformed spines by placing rods and screws to hold the spine in place while the bone graft and the bone knits together. Mazor’s robotic technology helps place those screws in the implants in a more efficient and precise manner, both in pre-operative and operative arenas. Surgeons use the system to plan out the surgery beforehand by imaging the spine in 3D, and simulating the implant and surgery using Mazor’s virtual modeling. That pre-operative plan is then used in the operating room with the robotic device and computer. The computer, along with sophisticated X-ray and 3D computer modeling software, facilitate the plan and execution, assisting the surgeon the do his or her job more accurately.

The Process

The system first images the body, creating a “pre-operative” blueprint of the spine and surrounding areas. Hardware is attached to the patient's back to guide the robotics, and the system is synchronized in 3D space to ensure accurate surgical execution. See the complete process in this video:

Start-up University Incubator

Israel Institute of Technology (Technion)

The company started with research in surgical robotics at the Robotic Laboratory of the Faculty of Mechanical Engineering at Israel's premier technology university, the  Technion (Israel Institute of Technology) in the 1990s. The company was founded in 2001 by Professor Moshe Shaham (Head of the Medical Robotics Laboratory of the Faculty of Mechanical Engineering at the Technion), and Eli Zehavi, a former Vice President of Engineering at Elscint (an Israeli technology company that developed, manufactured and sold medical imaging solutions, later sold to GE Healthcare and Philips Medical Systems).

Success in Business

Mazor’s robotic system has over 13,000 cases, showing proven accuracy (above 98%) and reproducibility. With a global presence in 18 countries, the $849,000 Renaissance robotics and computer system is being sold to and adopted by hospitals and surgery centers around the world. The system includes operation disposables costing only $1,500. Mazor also offers annual service agreements, surgical accompaniment and other services. The company reports consistent growth in its commercial installed base both in the U.S. and around the world. Mazor Robotics, an Israeli publicly-traded company, employs 150 employees.

Brain Surgery

Mazor Robotics continues to focus on new Research and Development (R&D) innovations. The company now also offers an approved brain module costing $129,000. This system allows the precise positioning of tools and implantable devices during brain surgery, aiding in biopsies and Deep Brain Stimulations (DBS).

Investable

The system’s gross margin is over 75%, which is good for investors. Its 40% recurring sales attest to the success surgeons and hospitals attribute to the system.

Though not yet profitable, this Israeli biomedical firm boasts a market capitalization of a 750,000,000 Israeli shekels (almost $200,000,000). The Israeli capital market clearly recognizes the potential inherent in the technology, and the growth potential in the medical markets. The stock has been listed on the Tel Aviv Stock Exchange (TASE) since 2007. Mazor shows a strong and growing balance sheet, with good cash reserves and low liabilities. Its stock is one of Israel’s 100 largest public companies, and part of the Tel Aviv 75 large-cap index. It can also be purchased as part of a Tel Aviv Biomed or Blue Tech index funds.

President Peres Visiting The Mazor Robotics Factory (photo by Assaf Shilo/Israel )

MarketWatch shows 2 analysts rating Mazor Robotics as "Hold", and 5 showing a "Buy" rating. This analyst on SeekingAlpha estimates a doubling of stock price over the next five years.

Stock Performance

Tel Aviv Stock Exchange

As noted above, Mazor Robotics' stock on the TASE has grown over 500% in the past four years. While tech and other stocks around the world and Wall Street have struggled so far in 2016 (down 9%-11%), Mazor has risen 7% (as of January 22, 2016).

Mazor Robotics, and other Israeli technology stocks, can be purchased on the TASE through an Israeli investment account, and held in Israeli shekels to add portfolio currency diversification.

Sources: Mazor Robotics, Wikipedia, Neurosurgery Register, YouTube, MarketWatch, SeekingAlpha

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Economy

Gross Domestic Product

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%

Inflation

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

Interest Rates

• Israel: 0.1%
• U.S.: 0%-0.25%

Balance of Payments

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

Unemployment

• Overall: 5.7%
• Ages 25-64: 4.8%

Exports

• Manufactured goods: 31.1%
• Chemicals and related products: 26.8%
• Machinery and transport equipment: 24.6%

Imports

• Machinery and transport equipment: 28.8%
• Mineral fuels, lubricants and related materials: 22.0%
• Manufactured goods: 20.5%

Main Trading Partners

World leader in science, technology and innovation: Israel

Israel’s World Economic Forum Ranking

Israel’s Institute for Management Development (IMD) Ranking

Capital Market

International Credit Rating

Market Classification

Indices

Tel Aviv Stock Exchange

• 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)
• Total number of securities listed:
  • 471 equity companies
  • 708 government and corporate bonds
  • 616 Exchange Traded Notes (ETN’s)
  • 1,328 mutual funds

Stock Performance

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."

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Construction site in the West Bank settlement of Modiin Illit: one mile outside the Green Line. Photo by AP

PGGM’s investments in Israeli banks amount to only a few tens of millions of euros. But its decision is liable to damage the banks’ image, and could lead other business concerns in Europe to follow suit.

A source involved in the issue said that over the past few months, the Dutch pension giant contacted Bank Hapoalim, Bank Leumi, Bank Mizrahi-Tefahot, the First International Bank of Israel and Israel Discount Bank and informed them that their ties with the settlements, and/or companies involved in building in the settlements, created a problem from the standpoint of international law.

The Israeli banks responded that Israeli law doesn’t allow them to cease providing service to entities connected to the settlements. Nor, given the daily reality in which the banks operate, would this even be feasible, they added.

Therefore, PGGM informed the banks that since it had not managed to alter their conduct with regard to the settlements via dialogue, and since no change in the situation seemed likely in the foreseeable future, it had decided to divest from them. This decision took effect on January 1, 2014.

PGGM is the Netherlands' largest pension management company and one of the leading such companies in the world, with some 150 billion euros of pension money under management. Last year, as it reviewed its investment policy for 2014, it considered divesting from several banks and companies worldwide in accordance with its policy of “social responsibility.” At the end of this review, it concluded that it would be impossible to create a firewall between its investments in Israeli banks and the banks’ activities in the Israeli territories (ed: Biblical lands of Judea and Samaria).

The company also cited its “responsible investment policy,” which excludes investing in bodies involved in “violations of fundamental human rights and labor rights.”

But according to a document released by the company in 2013, PGGM investments abroad include two Chinese banks –Bank of China and China Construction Bank – with offices and activities in Tibet, which is widely seen internationally as land occupied by China. PGGM invests in China Petroleum & Chemical Corporation, or Sinopec, which is exploring for oil in Tibet.

PGGM’s international investments also include the Malaysian palm oil producer Sime Darby, which last year paid a million dollars in reparations to villagers in Liberia amid accusations that the firm had violated their human rights and confiscated their property.

PGGM spokesman Maurice Wilbrink declined to answer questions on the scope of his company’s investments in Chinese firms active in Tibet, explaining that the figures were confidential.

Holding back the water: finger in the dike

It is the latest in a string of large Dutch companies that have cut off ties with Israeli entities.

During December, 2013, Dutch firms have engaged in a wave of boycotts, divestments and sanctions against Israeli firms.

The Dutch water company Vitens, the largest drinking water company in Holland, announced that it was suspending cooperation with Israel’s national water company, Mekorot, given the latter’s operations in West Bank settlements, citing the "political context" of Israel's West Bank settlements, which "cannot be separated from future projects." A few weeks earlier, another Dutch company canceled a contract to build a sewage treatment plant that it had signed with Jerusalem’s water company, Hagihon, because the plant was to be located over the Green Line.

Vitens, the Netherland's largest drinking water supplier, decided it will not do something both the Palestinians and Jordanians made abundantly clear the day before they are willing to do: work with Mekorot, Israel's national water corporation.

Mekorot Desalinization plant in Hadera, Israel

Vitens explained its decision by saying that it had to do with Israel's alleged violations of international law. The firm said that it places great emphasis on moral standards and abiding by international rules, and as a result could not continue cooperative projects with its Israeli counterpart.

The Foreign Ministry is very worried by the trend in the Netherlands. Officials in Jerusalem believe the background to this recent wave of boycotts is a new policy adopted by the Dutch government under which it encourages commercial enterprises to avoid any business dealings with the settlements. But in PGGM’s case, the pension company decided to boycott even Israeli banks with only indirect ties to the settlements.

Not all Dutch pension funds agree

Dutch pension fund ABP, one of the largest pension funds in the world, announced on Wednesday that after looking into the matter it sees no reason to end its relationship with three Israeli banks. It sees no reason to boycott Israeli banks.

The fund’s announcement runs firmly against the grain of the increasing public perception that Israel is on the verge of wholesale boycotts by European financial institutions.

ABP posted an announcement on its website on Wednesday saying that publicity about boycotts of Israeli banks has led the fund to explain why it does not exclude Israeli banks from its investments.

The fund said that its environmental, social and corporate governance policy – a catchall phrase for what is known as socially responsible investing – is based on two objective criteria: international law and the principles laid down in the UN Global Compact.

The compact is a policy initiative for businesses that want to align their operations with 10 universally accepted principles in the areas of human rights, labor, environment and anti-corruption.

The fund said its directorate discusses these matters each year and it has concluded that the Israeli banks – Bank Hapoalim, Bank Leumi and Mizrahi- Tefahot – “do not act contrary to international law and regulations,” and that there are no court rulings indicating a need to end investments in them.

Danske Bank, the largest in Denmark, recently said on its website that it is boycotting Bank Hapoalim for “legal and ethical” reasons.

Danish Bank CEO Peter Straarup

The Stockholm-headquartered Nordea Bank, the largest in Scandinavia, has asked for clarifications from Bank Leumi and Mizrahi- Tefahot regarding their activities beyond the Green Line.

It was later reported that Danske Bank featured unflatteringly in a State Department cable from May 12, 2009 – released byWikiLeaks – which said that the bank had a “correspondent account” with Tanchon, a North Korean trading company that has been involved in financing a ballistic missile sale to an Iranian group.

ABP is a pension fund for some 2.8 million government, public and education workers, with invested capital last year of some €292 billion.

Meanwhile, Prime Minister Binyamin Netanyahu on Wednesday again slammed countries for applying a double standard to the country, saying Israel is “a light unto the nations, but only for those in the international community who want to see the light, because there is a lot of hypocrisy.”

Netanyahu, speaking at a ceremony recognizing fighters against human trafficking, said that Israel battles for human rights and does everything to preserve human dignity amid a “struggle against us with endless cruelty.”

Israel is characterized as a war criminal and serial violator of human rights, while “around us the most horrible things are taking place,” he said.
“This hypocrisy harms efforts to eradicate the evil and promote the good. But we will not be deterred, we will continue our efforts to be a light among the nations, if only they want to see the light,” the prime minister said.

Israel and the Netherlands have enjoyed a warm relationship until recently when Dutch companies have begun to actively boycott and place sanctions on Israeli firms involved in the West bank.

In December, 2013 Prime Minister Benjamin Netanyahu said that the financial contributions and investments of the Netherlands in both the Palestinian territory and in Israel, play an important role in the peace process.

The European Union has adopted a series of moves designed to deter dealings with Israel as a result of its settlement policy, including the labeling of products made in settlements and sold in Europe and restrictions on grants for companies or institutions with operations in the West Bank and East Jerusalem, territory claimed by the Palestinians for a future state.

In return, Dutch Jews boycott anti-Israel firm

Dutch Jewish group calls for boycott of PGGM, the Dutch pension fund that divested from Israeli banks.

Dutch Jews are making it clear they don't intend to take the economic assault on Israel quietly. A group of young Jewish activists in the country have started a counter-boycott movement to make local firms feel the pinch for their discrimination against the Jewish state.

A group of young Dutch Jewish professionals called Tradition is Our Future (TOF) have have launched a boycott of their own. The group, whose goal is to defend Jewish life in the Netherlands, decided to take action after the PGGM divestment while noting a recent wave of anti-Israel fomentation.

In early January, the premier Dutch soccer team Vitesse left for training in the United Arab Emirates (UAE), leaving behind its best defender Dan Mori after UAE authorities refused to allow him into the country for being an Israeli.

"We are afraid that this is just the beginning, and therefore we need to take counter measurements. We call upon you to help us to boycott those who boycott Israel," declared TOF.

The counter-boycott being proposed targets PGGM's CEO Else Bos, who holds an advisory position on the board of Emory University located in Atlanta. Her profile can be seen among board members of the university's Center for Alternative Investments.

"We kindly ask for your co-operation and efforts to demand the resignation of Bos from her position in the board," requests the group, noting that doing so will send a message to PGGM and other Dutch firms considering to boycott Israel "that their policy is internationally unacceptable."

The Dutch Jewish group highlights the hypocrisy of PGGM in limiting "their moral crusade to only include Israel." They report the firm has invested in the Bank of China "while China occupies Tibet" and despite the bank's funding of terrorism, as well as Turkey which "has been occupying Northern Cyprus since 1974."

TOF summarizes, saying "it seems that PGGM believes that Israel and the Jews should be treated differently from other countries and other people."

The response of Dutch Jews fighting back brings to mind recent reports from France, where young Jews have begun taking matters into their own hands to defend their communities from a rising wave of anti-Semitism. In particular the French Jewish Defense League has been actively opposing public demonstrations of Jew hatred.

Interested in putting your beliefs into action? Find out how to invest in Israel yourself with as little as $5,700 (4,200 Euro) here.

The Netherlands officially opposes a boycott against Israel

The Dutch foreign minister said on Friday that the Netherlands still objects to settlements after several firms sever ties with Israeli companies, according to a report by Dutch News. But, the Netherlands rejects boycotts or sanctions against Israel, Dutch Foreign Minister Frans Timmermans told local media, Dutch News reported.

Dutch Foreign Minister Frans Timmermans. Photo by AFP

Timmermans qualified his statement, and said that the Netherlands is committed to its anti-settlements stance and discourages Dutch companies from doing business with them. "That has been the policy for years," the foreign minister said.

Timmerman's comments were made after several high-profile divestments by Dutch firms in recent months, such as PGGM's. The Dutch government said it had nothing to do with PGGM's decision.

The Netherlands and Israel recently had a disagreement following Israel's refusal to view a Dutch container scanner meant to be used in Israel's border with the Gaza Strip.

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Dutch Member of Parliament: "Boycotting Israel is wrong"

Dutch MP Kees Van Der Staaij. Photo: Wikimedia Commons

A member of the Dutch Parliament recently condemned the decision by a large Dutch pension investment company to divest from five Israeli banks.

MP Kees Van Der Staaij – who was in Israel for a four-day visit – said the move was very wrong and that most Dutch did not agree with the idea of a boycott.

He told The Jerusalem Post that he would ask for a debate in the Dutch Parliament on the matter and would do everything in his power to “encourage the Ministry of Foreign Affairs to issue a strong statement against the boycott.”

He also said he would push for his country’s government to intervene in the case.

During his visit to Israel, Van Der Staaij – the leader of theReformed Political Party in Holland – met with national water corporation Mekorot’s CEO, Shimon Ben-Hamo. He handed Ben-Hamo a shofar, to represent a new beginning and to symbolize the noise he planned to make in Holland to support Israel.

As mentioned above, Dutch water giant Vitens canceled cooperation with Mekorot because of alleged infractions of international law. The Dutch Foreign Ministry subsequently issued a statement saying it “opposes any boycott of Israeli companies or institutions, in line with its standing policy.”

As part of Holland's MP trip, the delegation met with the minister in charge of water in the Palestinian Authority, came to see the “Save a Child’s Heart” project at Holon’s Wolfson Medical Center, and talked to inmates at the Ofer Prison.

Van Der Staaij said he opposed any sort of boycotting, stressing that the settlements were a political issue and that Dutch companies needed to work together with Israeli and Palestinian ones, not disengage from them.

“The purpose of this whole visit was to undermine this type of action,” he said.

Israel Foreign ministry summons Dutch ambassador over ‘pro-boycott atmosphere’ in Holland

Dutch Ambassador Casper Veldkamp

The Foreign Ministry summoned Dutch Ambassador Casper Veldkamp in December, 2013, to protest what it said were “ambiguous” statements by the Dutch Foreign Ministry creating a pro-boycott atmosphere of Israel in the Netherlands.

Ministry spokesman Yigal Palmor condemns "self-righteousness" of decision by PGGM to cut ties with 5 banks over settlements issue.

The decision by a large Dutch pension investment company to divest from five Israeli banks is a “sanctimonious move intended to pander to a certain nefarious trend in public opinion,” Foreign Ministry spokesman Yigal Palmor said.

“It appears that people who make the decisions for the fund care more about showing an excess of self-righteousness than any sense of reality.

Catering light-headedly to the Israeli-bashing fashion could quickly backfire,” he said. Palmor explained that if the company followed “one trend,” there would be many other causes that others would seek to promote.

The official protest came a day after the Dutch water-giant, Vitens, canceled cooperation with Israel’s water corporation Mekorot because of alleged infractions of international law.

Israel protested that unclear language by the Dutch Foreign Ministry about doing business with Israeli firms was feeding a pro-boycott environment in the country.

Israel said vague statements warning of possible legal problems stemming from doing business with Israeli companies working beyond the Green Line – even though there is no legal precedent for that claim – were scaring away companies, who do not want to take any chances.

A spokesperson for the Dutch foreign minister in The Hague said the Ministry did not insist on the termination of the Vitens-Mekorot cooperation, and that the decision was taken by Vitens itself.

Is Britain next?

A similar problem is likely to erupt with Britain. As it too issued written guidelines recently warning businesses that economic activity in the settlements entails “legal and economic risks stemming from the fact that the Israeli settlements, according to international law, are built on occupied land and are not recognized as a legitimate part of Israel’s territory.”

Those contemplating any economic or financial involvement in the settlements, the guidelines read, “should seek appropriate legal advice.”

A spokesman at the British embassy said that these guidelines were “voluntary guidance” and not a boycott.

“The British Government firmly opposes calls to boycott Israel,” the spokesman said.

“We are deeply committed to promoting the UK’s trade and business ties with Israel, a vital element of the flourishing partnership between the two countries. We do not recognize the Occupied Territories, including the settlements, as part of Israel.”

The Trade and Investment website explained Israel’s presence in the West Bank as follows: “Israel’s armed forces occupied the West Bank, the Syrian Golan Heights and the Gaza Strip(along with the Sinai Peninsula) in 1967.” It provided no context whatsoever as to why or how this occurred, or what prompted the Six Day War.

 Pro-Palestinian pressure on European parliaments

Minister for Regional Development, Minister for the Development of the Negev and Galilee and Minister of Energy and Water

Meanwhile, Regional Cooperation Minister Silvan Shalom told Israel Radio that Vitens wrote that it was compelled to break off the cooperation with Mekorot because of heavy political pressure from Dutch Parliamentarians and Amnesty International.

Shalom advised not to “blow out of proportion” the Vitens decision, saying that a recent memorandum of understanding it signed with Mekorot dealt with the exchange of information and consultations.

He said the company, which wrote that it was sorry about cutting cooperation with Mekorot, said there was heavy pressure on stock holders from parliament members and anti-Israel organizations.

Shalom said that these incidents prove hollow the claim that, whenever Israel engages in negotiations with the Palestinians the Europeans will “get off our backs.”

“We are in the middle of negotiations, but it does not stop the anti-Israel organizations from acting.

They will act even if there is peace between us and the Palestinians,” he said.

Silvan Shalom: “I say to the Europeans, you cannot cry and whine all the time that you are not part of the diplomatic process, and that the U.S. leads it alone, when you take one sided, unbalanced and sometimes even hostile polices,” he said. “You want to be part of the process? Those who want to be part of the process have to come with a balanced policy toward the conflict, and only then come and demand to be part of the process.”

The day before in Washington, under the auspices of the World Bank, Israel, Jordan and the Palestinian Authority signed a trilateral memorandum of understanding on water exchanges and allocation, an agreement that will obviously involve Mekorot.

Although the official company statement did not divulge exactly what regulations Mekorot violated, Dutch media reports said that Vitens decided to cancel collaborations due to Mekorot's presence in the West Bank, following consultations with the Dutch Foreign Affairs Ministry.

Foreign Ministry spokesman Yigal Palmor, noting that the Palestinians will cooperate with Mekorot, while the Dutch firm will not, said "what we see here is an urgent need for a little common sense."

"It is more than strange that this Dutch company should boycott an Israel peer that works with the World Bank on a very important regional cooperation project, which includes the Jordanians and Palestinians," he said. "This only shows that by caving in to boycott pressures, one makes absurd decisions that result in a topsy-turvy situation."

Dutch Foreign Minister: Europe judges Israel by a different standard than other Middle East countries

Dutch Foreign Minister Frans Timmermans. Photo: Andres Lacko

Europe judges Israel by a different standard than other countries in the region because it is seen as a “European country” that should be judged by European standards, Dutch Foreign Minister Frans Timmermans said here on a visit to Israel.

“There is no way we can disentangle the destiny of Europe from that of Israel, and we better face that fact,” said Timmermans during a lecture at Beit Hatfutsot, sponsored by the Israel Council on Foreign Relations, which operates under the auspices of the World Jewish Congress.

Timmermans said that it was hard for some in Europe to deal with a strong Israel. “It is easy to be Israel’s friend as an underdog,” he said, adding that was something “cultural, part of our heritage.”

What is harder for some Europeans, he said, is to be Israel’s friend when it is “top dog,” and perceived as “not relenting, not giving in to the requests of other people.”

Everyone, he said, would benefit from a “closer cooperation” with Israel given its position in the region, its intelligence information and security analysis.

Asked about a recent Dutch government recommendation to the giant Royal HaskoningDHV engineering company to cancel its participation in building a sewage treatment plant, because it was across the Green Line, Timmermans said that “all territories beyond the Green Line don’t belong to Israel, and if you start a project, you need the agreement of local [Palestinian] authorities.”

He said that the Palestinians were not involved in the project, and as a result the government discouraged the Dutch company’s participation.

He said the Dutch government discourages companies from economic involvement beyond the Green Line.

Palestinians hail Dutch firm's decision to pull out of east Jerusalem sewage project

Palestinian leader Dr. Hanan Ashrawi Photo: Wikimedia Commons

The Dutch engineering firm Royal HaskoningDHV was pressured by the Dutch government to withdraw participation from an Israeli sewage treatment facility initiative. The firm that was slated to participate in the construction of the sewage treatment facility in east Jerusalem, yet announced in September, 2013 that it was pulling out of the project.

In a move that drew praise from the Palestinians, the company, Royal HaskoningDHV, released a statement saying that it decided to terminate its involvement in the project “after due consultation with various stakeholders.”

“Royal HaskoningDHV has today advised the client it has decided to terminate the contract for the Kidron waste water treatment plant project,” the firm announced on its Web site. “The project is in the early stages of the preliminary design phase.”

The move was applauded by the Palestinian Authority. Hanan Ashrawi, an executive committee member of the Palestine Liberation Organization, hailed the Dutch firm’s decision. According to Ashrawi, the Dutch government had pressured the company to withdraw from the project.

“This project deepens Israel’s annexation of East Jerusalem, consolidates its occupation of the West Bank, and constitutes another obstacle to the establishment of an independent and sovereign Palestinian state on 1967 borders with east Jerusalem as its capital" said Ashrawi.

In July, 2013 the European Union enraged the Israeli government after its controversial decision to institute new guidelines limiting interaction with Israeli entities beyond the pre-1967 lines.

PLO Executive Committee member Dr.Hanan Ashrawi also issued a statement welcoming the Dutch pension fund PGGM's divestment decision.

“I commend PGGM for translating its corporate social responsibility policy into practice,” she said.

Do you disagree with Holland's position on investing in Israel? Tell us what you think here.

Sources: Reuters, Jerusalem Post, HaAretz, i24news, Arutz Sheva

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