In addition to the current English Tel Aviv Stock Exchange (TASE) website, on June 29, 2020 the TASE announced the launch of the English version of its “MAYA” immediate corporate reporting website. The English “MAYA” website is designed to make information regarding the TASE and the companies listed on it much more accessible to foreign investors, particularly in light of the growing interest expressed by investors from around the world in Israeli companies. There are 517 publicly traded Israeli stocks, 750 corporate bonds, 45 government bonds, 549 ETFs, and 1,169 open-ended mutual funds listed on the TASE that can be purchased by investors around the world.

For the first time, TASE is launching an English version of the MAYA website. The Israel Securities Authority (ISA) encourages companies to publish their reports in English as well, in order to make the information accessible to foreign investors. Corporate reporting includes, among others, notifications concerning announcements & transactions, financial statements, capital raising information, changes in the companies' management, interested parties, corporate actions, splits, mergers and more. These disclosures will be posted on the MAYA English language website, generating additional foreign investor exposure to these companies.

To serve this growing needs of international investors in Israel in English, Wise Money Israel Ltd (WMI) works closely with hundreds of clients from around the globe to invest in Israel's robust economy and strong capital market through Israeli investment accounts on the TASE. Where there is demand, there will also be supply, and the demand for purchasing equities and bonds of publicly-traded Israeli companies is rapidly rising. Accordingly, the TASE is continually adding new features and making information more accessible to the international investor, while WMI is positioned as the leading, ISA-licensed English-speaking Portfolio Management firm to manage local and international investors assets in the Israeli market in a prudent and effective way.

The MAYA website, which serves as a central website for investors active in the Israeli capital market, was initially launched in 2000 and is the go-to site for a wide array of corporate information such as corporate fact sheets for each company, summarizing key corporate information (fields of operation, principal shareholders, corporate securities and financial performance), management and officers, corporate filings, reference and payment dates, IPO and new secondary public offerings, financial report schedules, dividend distributions and payments, and more. The TASE also posts its own announcements on the "MAYA" site, such as general announcements, board of director resolutions, etc.

The TASE places great importance in the publication of disclosures in both English and Hebrew and believes that this will increase foreign investor exposure to and investment in TASE-listed Israeli companies.

To view the English MAYA system click the following link: https://maya.tase.co.il/en

Contact us for more information about opening an Israeli investment account

To invite a speaker click here.

_____
Sources:
Tel Aviv Stock Exchange, Bizportal Terminal 360

The post TASE Signals to International Investors appeared first on Wise Money Israel.

The Standard & Poors (S&P) credit rating agency upgraded its credit rating for Israel from A+ to AA- (stable outlook), ushering Israel into an exclusive group of 15 nations that hold the prestigious AA ratings (AA+, AA and AA-). The upgrade was announced on Friday, August 3^rd after S&P changed its outlook for Israel’s economy from “stable” to “positive” approximately one year ago.

This upgrade represents the highest-ever credit rating given to Israel by S&P or any other credit rating agency in the history of the nation and comes one month after Moody’s credit rating agency also raised its outlook for Israel from “stable” to “positive” in July 2018, indicating an upgrade in their rating from A1 to Aa- in the coming 12-18 months.

S&P explained its decision by stating that “Israel has demonstrated sound economic performance since the global financial crisis, with a current GDP of about $140 billion (or 50%) larger than in 2010, the current account in a sustainable surplus, and unemployment at historical lows,”.

They also added that despite Israel’s political situation being “highly fragmented” and the public debt remaining relatively high, “we now think that fiscal slippages leading to a significant reversal of the debt path are unlikely. This is based on our belief that, absent global trade shocks, Israel’s economic growth outlook will remain solid and allow the government to accommodate pressures coming from social and infrastructure spending, as well as a potential moderate escalation of security risks”.

Prime Minister Benjamin Netanyahu praised the upgrade, stating: “These decisions reflect the strength of the Israeli economy and the correct and responsible economic policy that we are leading on behalf of Israel’s citizens”.

After being at the helm of Israel’s economy since 2015, Finance Minister Moshe Kahlon also expressed his satisfaction from the S&P upgrade. "In the past three years, the Israeli economy has soared to the best macro data in its history. The confidence expressed by the strongest economic bodies in the world allows us to continue to grow the economy and to help reduce social gaps and strengthen the middle class and weaker sectors. The increased rating of AA- will save us billions of shekels in financing expenses, which we will redirect to the health, education and welfare ministries.” He said, optimistically adding "Although now it is double-A minus, this minus will disappear in a year".

Moody’s stated two main reasons for its outlook upgrade last month, one being recent positive trends in Israel’s government debt and the second Israel’s robust economy.
"The general government debt ratio has declined by more than 10 percentage points since the last upward move in Israel's credit rating in 2008 to around 60% of GDP, reflecting in part a prudent budgetary framework and a robust growth performance. This contrasts sharply against trends in many other advanced country peers both before and after the global financial crisis. For example, Israel is one of only a handful of advanced economies (including Norway, Switzerland and Singapore, which are all rated Aaa with a stable outlook) with a lower debt to GDP ratio today than before the global financial crisis. Furthermore, central government deficits have remained below 3% of GDP over the past 4 years, despite repeated upward revisions of the government's own deficit targets."

"The second driver of the decision to assign a positive outlook is Israel's increasingly resilient economy, supported by the dynamism of the high tech sector, increased energy independence and a strengthening external position, which, if sustained, will continue to support more favourable growth rates than similarly rated peers,".

Finance Minister Kahlon reacted to Moody’s outlook upgrade, stating “The rating outlook upgrade is further evidence of the strength and stability of the Israeli economy. All the data indicate that the economic policy that we are pursuing, including a free and responsible economy alongside strengthening the middle class and poorer sections of society, is the right way”.

Credit rating agencies base their ratings on the governments ability to repay its debts, but also heavily consider geo-political, macroeconomic and other strategic factors pertinent to each country, often comparing between peer countries. The ratings given by S&P, Moody’s and Fitch are the most prominent indicator of a country’s economic situation and are used to evaluate investment opportunities of many types. A higher credit rating expresses confidence in Israel’s economic policies and its future, and will allow the government to finance at lower costs.

Because of the credit rating upgrade, Israel’s capital market reacted positively with significant gains on Sunday, August 5^th, seeing the largest indexes, Tel-Aviv 35 and Tel-Aviv 125, rising 1.69% and 1.55% respectively by the end of trading. This is the highest level the market has been at in almost three years. The Shekel also strengthened 0.5% against both the USD and the Euro due to the upgrade.

Looking ahead, S&P analysts predict an average year over year GDP growth of 3.3% between 2018 and 2021, resulting from private consumption, corporate investments and strong performance in the high-tech and fields of service exports.

Sources:

Wise Money Israel, The Times of Israel, Calcalist, Globes, Jerusalem Post, Ynet

The post Israel Receives Highest-Ever Credit Rating appeared first on Wise Money Israel.

When author Mark Twain visited the Land of Israel (then still called Palestine) in 1867, he penned impressions of what he witnessed in his book “Innocents Abroad”:

“A desolation is here that not even imagination can grace with the pomp of life and action. We reached Tabor safely. We never saw a human being on the whole route.  There is not a solitary village throughout its whole extent – not for thirty miles in either direction. ...One may ride ten miles hereabouts and not see ten human beings. ...these unpeopled deserts, these rusty mounds of barrenness...”[i]

In conclusion Twain claimed that “Palestine sits in sackcloth and ashes.... desolate and unlovely...”[ii]

Others described the land as “desolate and roamed through by Arab bands of robbers”[iii], “nothing but houses in ruins, cisterns rendered useless, and fields abandoned”[iv] and even late in the 19^th century a French traveler wrote that Haifa “can be crossed in five minutes”[v].

The picture is clear: a mere 100 years ago, the Land of Israel was desolate of people and of buildings, and villages that did exist were comprised of small, rural shacks. That is certainly not the scene that travelers arriving in Israel today first lay eyes upon.

“Though you were ruined and made desolate and your land laid waste, now you will be too small for your people, and those who devoured you will be far away. The children born during your bereavement will yet say in your hearing, ‘This place is too small for us; give us more space to live in.” - Isaiah 49:19-20

Construction in modern day Israel is booming, with apartment buildings, malls, hotels, highways, interchanges and high-rises springing up all over the country, like mushrooms after the rain. Today, Israel boasts over 750 skyscrapers that are 20 floors high or more – hardly a desolate wasteland with barely a village for “thirty miles in each direction” Israel is now a thriving and developed nation, constantly growing and building at an exceptional rate.

Especially notable is Israel’s largest city of Tel Aviv, where dozens of new corporate office buildings and luxury apartment buildings can be seen rising from the Ayalon freeway as it curves through the city. Major construction can also be seen in Kfar Saba, Kiryat Gat, Herzilya, Hadera and Rosh HaAyin with each city’s construction growth rate rising considerably compared to the same quarter last year by 309%, 260%, 114%, 109% and 100& respectively[vi]. The rise in construction is also reflected in Israel’s House Price Index which hit an all-time high in May of this year, up 114% in the past 10 years.[vii]. Israeli real estate prices even continued to rise during the 2008 global financial crisis, with no sub-prime or mortgage-backed securities setbacks.

Israeli real estate is seen by many as a solid and long term investment. However, purchasing real estate here requires a large amount of initial capital, comes with high entry and exit high fees (lawyers, bank fees, agents, taxes, etc.) and the investor must endure a hefty amount of bureaucracy. Property management from abroad is difficult, and unfortunately there aren’t companies here that offer that service to individual investors. Another disadvantage is the illiquidity of the funds used to purchase the real estate, and in times of need are difficult to obtain speedily without suffering significant losses.

That being said, there is a very practical way for investors to gain exposure in their global portfolios to Israel’s real estate market, and at the same time bypass the disadvantages that come with purchasing actual real estate. This is accomplished through purchasing real estate stocks and bonds in Israel’s financial market. The $5,000 investment brokerage account minimum allow the small and mid-size investor to have income-generating Israeli real estate in their portfolios that generate regular dividends.

There are several different options for purchasing real estate stocks or bonds on the Tel Aviv Stock Exchange:

1. A REIT – Real Estate Investment Trust – buys, develops, manages and sells rental real estate assets and real estate loans (mortgages).  Its professionals manage a portfolio of real estate properties that generally include commercial rental properties (such as shopping centres, office buildings, hotels, industrial buildings, etc.) that return rental income for shareholders, typically through large dividends and long-term capital appreciation. This type of specialized company offers shareholders ownership of real estate through the purchase of stock. Investing in a REIT stock versus the direct purchase of real estate has become a popular way for individual and institutional investors (pension funds, mutual funds and insurance companies) to easily gain exposure to the real estate market. REITs have been operating in the United States for small to medium investors since the 1960s, and together are worth hundreds of billions of dollars.There is are a number of publicly-traded REIT investments on the Tel Aviv Stock Exchange. ”REIT 1” operates as a real estate investment trust with a property portfolio that includes office buildings, commercial spaces, and industrial properties. REIT 1’s stock price has risen by over 180% during the past five years and currently holds an impressive market capitalization of 1.88 billion NIS (approx. $500 million USD)[viii]. REIT 1 is purchasable either through direct stocks or corporate bonds. Sela Capital, another Israeli REIT, has returned 25% to investors in the past 12 months. Another REIT, focusing on residential real estate, had an IPO this month.
2. Stocks and bonds of individual construction companies and/or indexes that track the Israel real estate sector. For example the Tel Aviv Real Estate 15 index includes stock in the largest 15 real estate companies, including the Azrieli Group, Alony Hetz Properties & Investments, Airport City, Africa Israel Properties and Shikun & Binui. The index has risen 18% YTD and has gained approximately 90% over the past five years[ix].

It is amazing to see how Israel has transformed from a desolate, desert, swamp land into the established built-up land that it is today. It is nothing short of a miracle. According to the Scriptures, looking ahead we can foresee that this modern-day, “nation born in a day” miracle will continue to grow and thrive. If you desire to take part in building up the Land of Israel, literally, by investing in Israeli real estate, you now know that there is a simple and accessible way to own Israeli land and real estate without the hassles of purchasing it yourself.

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

[i] Mark Twain, The Innocents Abroad

[ii] Ibid

[iii] Brockhaus, Alig. deutsch Real-Encyklopaedie, 7th ed. (Leipzig, 1827), Vol. VIII, p. 206

[iv] Count Constantine F. Volney, Travels Through Syria and Egypt in the Years 1783, 1784, 1785 (London, 1788), Vol. 2, p. 147

[v] Brother Lievin de Hamme, Guide indicateur, Vol. Ill, pp. 163, 190

[vi] Globes

[vii] Israel Central Bureau of Statistics

[viii] Tel Aviv Stock Exchange

[ix] Ibid

The post Building a Nation: Israel’s Booming Real Estate Market appeared first on Wise Money Israel.

By Wise Money Israel Analyst

In the past 5 years, the U.S. stock index S&P 500 increased approximately 105%. The Dow Jones Industrial Index returned about 86%. However, during that time period, Israel’s Tel Aviv Stock Index (TA-25) registered “modest” growth of approximately 54%. [The TA-25 doubled and quintupled Wall Street’s performance over the past 10 and 15 years time periods respectively]. The more interesting question is what will does the future hold? Which market will outperform over the next five years?

I believe that the Israeli stock market is more attractive than other developed nations, especially compared to the American stock market that gained considerably in the past five years. Here are three key reasons why investing in the Israeli stock market is a better investment than the American stock market:

1. 1. More attractive P/E Ratios: When comparing Price/Earning ratios¹ between stock markets around the world and other ratios, we can see that the Israeli market is more attractive (cheaper) than the majority of developed nations’ stock markets around the world, and in particular, the U.S. stock market. There are countries with more attractive multiples, but these are developing nations or emerging markets and not developed countries. See the table "Market Indicators By Nation". [Israel's indicators rank it as the 10th best market]

1. Macro-economic indicators support growth: When we look fundamentally at the Israeli economy, there are several indicators that support long-term growth, compared with the other developed nations in the world. For example, Israel’s Debt-to-GDP ratio of 67% compares well to Germany’s higher debt ratio of 75%, 91% in the Euro block, 101% in the United States, and 230% in Japan. In addition, Israel’s unemployment rate is approximately 5.0% [OECD average: 7.4%], GDP is about 3.0%, and Israel’s population growth rate is the second fastest in the world’s developed economies (only Ireland is growing faster). In addition, Israel is characterized by a young population, well-educated (ranking second place globally for percentage of high school graduates, and first place globally for percentage for PhDs). Despite these indicators, the domestic economy is lagging compared to developed countries in per capita income. Therefore, I believe that the local Israeli economy will continue to grow at a faster pace than the developed nations average in the coming years.
2. The ratio of companies’ valuation to GDP. As is well known, in the long-term a stock market’s valuation will move in relationship to certain key indicators. Warren Buffett claimed that the ratio of companies’ valuation to GDP is “the single best indicator for overall stock market pricing.” The table "Capitalization to GDP" summarizes the stock markets pricing valuation as derived from this ratio.
   [TABLE=32]
   

   click to enlarge

   

   click to enlarge

   As you can see in the graphs here, the ratio between the companies valuation compared to GDP of the Israeli stock market is approximately 0.78, meaning it is priced between “fair value” value and “cheap market” value. On the other hand, the U.S. stock market ratio is 1.27! In other words, the indicator shows that the U.S. stock market is very, very expensive, and we can expect to see a deep correction downward in U.S. indices.

Accordingly, I believe that in the near future, the Israeli stock market will outperform compared to the U.S. stock market, and therefore, we recommend that you increase your exposure to Israeli stocks, and consider closing U.S. stock market positions.

Disclaimer:
This work is carried out based solely on publicly available information. Not all tests were performed to verify the accuracy of the information forming the basis for this. The information may contain errors and subject to changes after the publication of this document. The information contained in this report does not purport to contain all the necessary information regarding the matters contained in it, nor is it intended to be a complete analysis of all the facts and information contained in it. Furthermore, there could be substantial discrepancies between the assessments introduced here and actual results. The editor/author is not obliged to inform the recipients in any way for such changes in advance or after the fact. This document should not be considered a recommendation or substitute's the reader’s own discretion or an offer or invitation to obtain offers, or advice to buy, making investments or carrying out activities or transactions whatsoever. This analysis reflects our understanding on the date of publication of the document. This document is not a substitute for professional advice, including legal advice and therefore you should not rely solely on the information contained in it, and it does not replace independent judgment and receiving professional or legal advice that takes into consideration the special needs of each person. Wise Money Israel, its employees and associates, and anyone acting on its behalf, shall not be liable in any manner for any damage and/or loss caused to the use of this document, if any, unless caused by negligence and/or lack of good faith and/or malice on their part, and cannot guarantee or be responsible for the reliability of the information set forth in this report.
This document is intended solely to qualified customers, as defined in the Regulation of Investment Advice and Investment Portfolio Management Law - 1995. This work is not to be distributed, transmitted, copied or used in any other way without the approval of Wise Money Israel’s prior written consent.

¹ Price/Earning Ratio - dividing the value of the trading company by net profit last year. This test was done on all public companies of the leading indices in each country.

The post Israeli stock market – outperform Wall Street appeared first on Wise Money Israel.

A growing economy

Israeli GDP grew at seasonally adjusted 7.2% in the fourth quarter of 2014. According to Tel Aviv-based Meitav Dash Investment House, “The economy is certainly not in slowdown or recession, but growing at a quite high rate of 3% [annually] - that rate would arouse the envy of many countries in the world.” According to Alex Zabezhinsky, chief economist at Meitav Dash, this growth rate “does not represent the [actual] state of the economy. [This] growth is attributed to several factors whose influence are transitory.” The economist indicates that following Operation Protective Edge in the summer of 2014, there was accelerated economic activity to compensate for the stagnation during the war. A similar phenomenon has been seen in the past, for example, after the Second Lebanon War. Secondly, the tax regime change created a considerable increase in the purchases of vehicles by businesses and by private consumers. Thirdly, increased government consumption in the second half of the year is believed to be related at least in part to replenishing equipment after the war. Based on data from the Israeli Central Bureau of Statistics, the corporate sector's GDP, recorded in the fourth quarter, was even higher growth - an annual rate of 8.8%.

Israeli housing prices keep going up

Israeli house prices continue to rise. Having never experienced a sub-prime crisis as the rest of the world did in the Great Recession of 2008-2009, economists wonder if a price correction is in sight. The price of housing in Israel is one of the highest in the world. It costs an average of 140 monthly salaries (almost 12 years) to buy an apartment in Israel. Because of potential future VAT-reduction legislation, there was stagnation in the real estate sector during Q4, 2014. The legislation was scuttled. Investments in fixed assets (investments in residential housing and the construction, equipment, and vehicles sectors) were down by an annualized 1.9% in the second half of 2014, following a 6.8% drop in the first half. Bank of Israel Governor Karnit Flug says, “If construction continues at the pace set in 2013 and 2014, in other words 44,000 building starts, and if it includes high-demand areas, then there is a reasonable chance that we'll see stability and even the beginning of a drop in prices.” Despite the rhetoric, house prices continue to rise. According to the latest Bank of Israel Monetary Committee, in the 12 months ending in November, 2014, house prices increased by 5.8 percent. The trend of decline in the number of transactions has continued in recent months, though it was concentrated in the purchases of second-hand homes. The number of new home purchases, particularly those in the price range that would have been included in the zero-VAT plan, has increased sharply since September (when it became clear that the zero-VAT plan wouldn’t happen), and between August and November there was a moderate decline in the number of new homes available for sale. The pace of building starts and building completions remains relatively high.

Low inflation or deflation?

While Israel ranks #1 globally for inflation stability, for much of 2014, inflation was lower than expected (sub-1%). Then in November, 2014 and January, 2015, the month-over-month CPI readings were negative (technically deflation). Dr. Karnit Flug said she believes that inflation will reappear in the second half of 2015, but is “unwilling to even consider raising the interest rate.” Meitav Dash’s Zabezhinsky estimates inflation to be only 0.5% over the next 12 months, with interest rates rising only 0.25% to 0.5% during that period.

Banking System

Dr. Flug indicates that the banking system is more resilient than it was on the eve of the global credit crisis, but the banks are still too big to fail. The largest bank, Bank Leumi, is embroiled in controversy surrounding an investigation into its assistance to U.S. customers to evade American taxes. Bank stocks, which had been up as much as 10% in 2014, have been tumbling in the past six months (not withstanding a 3% jump in mid-February based on improved GDP readings). Despite this, CPI-linked Israeli bank bonds held stable and even gained ground during that time.

Exchange Rates

Click to see full-size

For U.S. investors adding funds to their Israeli brokerage accounts, the shekel-dollar exchange rate is key to gaining the most shekels with the same USD. The second half of 2014 was uncharacteristic of the longer-term trend of shekel strengthening. The U.S. dollar strengthened against other world currencies, including the shekel. By year-end, one USD could purchase 14% more shekels. Having met resistance at 4.0 NIS/$, the shekel has regained strength against the dollar by 3%, and may indicate a trend reversal. Dollar-heavy investors should strongly consider converting currency to shekels at this time, while the dollar is still relatively strong.

Capital Market Review

The Tel Aviv 100 stock index gained 7.5% in 2014, and continues on a similar pace in 2015. After having uncharacteristically low returns in 2014, solid Israeli corporate bond indices began 2015 with gains of almost 2% (as of mid-February). Of particular note in 2015 so far, is the Tel Aviv Real Estate 15 stock index, which has returned 9% in just the first month and a half of this year. The small-cap stock index has also outperformed, with a 6.9% gain so far.

Employment, GDP, National Debt and Government Spending

Israel’s unemployment rate continues to be low, at 5.7%, with Gross Domestic Product (GDP) estimates at 3.0% growth for 2015. Israel’s GDP-to-Debt ratio continues to be one of the developed world’s best at only 67% (vs. 102% for the U.S.).

The Bank of Israel expects the total government deficit in 2015 to be slightly under the 2.5 percent of GDP target ceiling. According to a Bank of Israel’s Press Release this month, government expenditures in 2014 were slightly lower than the original budget, despite the NIS 7 billion supplement to the defense budget due to the direct costs of Operation Protective Edge (Gaza War).

Business sentiment, exports and tax revenues

Israel’s largest investment firm indicates that consumer and business sentiment in the economy continues to improve. Businesses expect an increase in recruitment and in work activity. There was particularly marked improvement in construction and industry. Data on manufacturing exports shows significant growth mainly in the pharmaceutical and electronic components areas. The increase in tax revenues is indicative of an improvement in economic activity. Meitav Dash expects the next elected government not to need to take significant fiscal restraining steps. The international rating agency Standard & Poor’s (S&P) confirmed its rating of Israel. The company noted a drop in international support for Israel could harm future rankings. In light of the above, Meitav recommends corporate bonds with average maturity of about three years, with preference on floating-rate bonds over short-term shekel bonds.

Conclusion

In summary, the Israeli economy has shown solid growth and sound fundamentals. The capital market, while challenged by multiple factors, continues to provide a good way to invest in Israeli innovation and ingenuity. The current exchange rate provides a comfortable entry point for those with U.S. dollars.  Sources: Globes, Meitav Dash, Bank of Israel, Calcalist, Trading Economics, Israeli Central Bureau of Statistics The above is the opinion of the writer and should not be taken as financial advice, nor is it a commitment to achieve any future returns. Past performance does not ensure similar future returns. At the time of authorship, the author may or may not hold securities mentioned in the article. This publication does not constitute an offer to purchase, sell or hold securities or units in a fund, and is not a substitute for investment and/or tax advice that takes into account the special needs of each person. Please consult a professional investment advisor concerning your specific situation before making personal financial decisions.

The post The Amazingly Resilient Israeli Economy appeared first on Wise Money Israel.

Natural Gas Discoveries

The considerable natural gas discoveries of the past few years have put Israel squarely on the world map as a global supplier of gas. The large gas discoveries so far have confirmed that the Levant basin of the Eastern Mediterranean Sea off the coast of Israel contains significant quantities of natural gas and, potentially, crude oil. The Leviathan field is the largest offshore discovery of the past decade, and is estimated to hold as much as 17tn ft³ of gas.  BusinessWeek estimated the reserves' value at $240 billion. The development of these untapped Israeli resources may alter the geopolitical and financial climate of the country in the next decade.

Mr. Zury Ilan, Vineyards Capital Markets - Chief Analyst

Mr. Ilan indicates that if we look at the gas discovered already (not including the considerable amounts estimated, but not discovered yet), the capitalized cash flow from the two largest discoveries alone are greater than the entire national debt of Israel.

The Israeli government and economy will both benefit from the increased revenue and export of this natural resource, making the Israeli financial market more attractive, and the shekel a more attractive currency.

Please note that many of these company are investable via bonds and stocks only on the Tel Aviv Stock Exchange.

Debt to GDP decreasing

Israel's national debt is decreasing, while many other western countries' debt levels are increasing. Israel's Debt to Gross Domestic Product ratio has been dropping in the past 10 years to a current level of 74%. This good economic trend can be compared to the U.S. increasing debt trend, and current level of 103%. Investors are seeing the correct direction of Israel's debt-to-GDP ratio, and putting their confidence in the shekel, increasing its value.

Israel's Credit Rating Upgrade

Zury believes that there is a good chance that in the next two or three years, Israel's credit rating will increase one rating notch. This is because the international credit rating agencies (Standard & Poor's, Moody's, etc.) will recognize the 1% GDP increase based on government royalties from the production of natural gas from offshore drilling. Because of this upgrade, more foreign institutions will want to buy Israel government bonds (and corporate bonds because of the jobs created due to the production and export of the gas). The influx of dollars to the Israeli market to buy the bonds will increase the value of the shekel, as more dollars will chase fewer shekels.

How Can I Take Advantage of a Strengthening Shekel?

In order to invest on the Israeli national stock exchange (TASE), you need to open a shekel-denominated investment account with a bank or brokerage. Contact us if you'd like assistance in this process.

The post Making Money From a Strong Shekel appeared first on Wise Money Israel.

Investing in Israel isn't just for the mega rich or sophisticated investor; this article is about why you should consider linking some of your money with Israel regardless of the amount or your investment experience.

This is part three of a four-part series on good reasons to invest in Israel:

• our article
• our article
• Why Israel's economy is strong (below)
• our article

Why Israel's economy is strong

1. Israel's real GDP growth (3.2% for 2010) is higher than that of other developed nations (2.3%), according to the International Monetary Fund (IMF). For 2010-2011, IMF projects a 3.4% growth for Israel, better than that of the United States, Japan, United Kingdom, Canada, France and Germany.
2. The IMF predicts Israel's 2010 inflation rate will be relatively low at 2.3%.
3. Israel has a relatively low unemployment rate. The IMF projects Israel's unemployment rate to be 7.4% in 2010, compared to the average unemployment rate in developed economies of 8.4%. In comparison the United States 2010 unemployment rate is projected to be 9.4%.
4. Israel's current account balance ended 2009 with a surplus of $7.2 billion, 3.7% of total GDP (up 453% from 2008). The United States ended 2009 with a deficit of $418 billion (2.9% of GDP).
5. Israel recently became a member of the OECD (Organisation for Economic Co-operation and Development). This prestigious international economic body is a forum of developed countries committed to democracy and the market economy and coordinating domestic and international policies of its members. Israel joins member nations such as the United States, Japan, Canada, France, Australia, United Kingdom and Germany.
6. Israel had very low growth in its debt to GDP ratio during 2009. Debt to GDP ratio ended the year at 79.9 percent, only 2.8 percent higher than the year-end percentage for 2008. This achievement can be attributed to the well-planned and disciplined fiscal policy implemented by the government.
7. General government consumption accounts for a small portion of the total GDP.
8. The Israeli Central Bank recently reported Israel’s M1 money supply dropped 1.1%. This compares well to other countries, including the U.S. and U.K., where printing massive amounts of money among other liquidity strategies caused their money supply to increase by hundreds of percent over the last two plus years. Flooding an economy with money usually leads to high inflation. Israel is not in danger of high inflation.
9. Israel is a big exporter: because of limited natural resources, in terms of foreign trade Israel imports raw materials such as crude oil, coal, raw diamonds, etc. and exports manufactured goods such as polished diamonds, aircraft parts, pharmaceutical products, chemicals, electronics, etc. This gives the country an advantage since raw materials are usually cheap but manufactured goods offer high profits. For example, in March 2010 manufacturing goods (excluding diamonds) accounted for 80% for all exports.
10. Unlike the U.S., which usually runs a large trade deficit because of imports from China, Israel’s trade deficit is very small. The U.S. and Europe are Israel's largest trade partners and also its largest export markets.

Sources: Central Bureau of Statistics (CBS), Ministry of Finance, Bank of Israel, International Monetary Fund, Vale-Columbia Center on Sustainable International Investment, Government of Israel Economic Mission, Tel Aviv Stock Exchange and others

Next in this series: our article

How can I invest in Israel?

There are many ways to invest in Israel or Israeli companies, from buying Israeli stocks on Wall Street, ETFs or mutual funds, bonds, or investing directly on the Tel Aviv Stock Exchange from an Israeli investment account. You can read more about our article for details.

Keep checking back on Wise Money Israel (or get email updates) to gain more insight and tips on how to wisely invest in the Israeli capital market.

The post Why Israel’s Economy is Strong appeared first on Wise Money Israel.

This is part two of a four-part series on good reasons to invest in Israel:

• our article
• Why foreign investors like the Israeli financial market (below)
• our article
• our article

Why foreign investors like the Israeli financial market

1. Israel's largest publicly traded company's stock prices (Tel Aviv 25 index) soared 62% in the past five years, compared with the negative (-11%) performance of the S&P 500 (the standard benchmark for U.S. stock performance) during the same period.
2. Foreigners are investing in Israel because they are seeking better performance and a strong market. Foreign investment reached an impressive $9.3 billion in 2009 (4.8% of GDP). Funds also entered Israel through the Tel Aviv Stock Exchange. The Tel Aviv 25 index, for example, showed an impressive 71% return during 2009 while the S&P 500 returned 28%. Owning Israeli stocks or bonds on either the Tel Aviv Stock Exchange or Wall Street is a good way to take advantage of this country's strength and economic stability.
3. The Israeli shekel has outperformed many world currencies during the recent global crisis. Nowadays, many investors have become wary of the dollar considering all of the money printing that has gone on in the U.S. in the last two years. Investors are also fleeing the euro, trying to gain currency stability in other currencies. With future high inflation in the U.S. almost assured, it would be wise to get exposure to other strong, foreign currencies. One destination investors are placing their money is in Israel and in the Shekel through investing in Israeli stocks and bonds. The Israeli Shekel has gained 20% on the U.S. dollar in the past five years (as of May, 2014).
4. Investors are recognizing the strength of the Israeli capital market vs. other global markets. Israel is considered a safe-haven due to its resilient economic performance during the recent economic crisis, relative to other world markets.
5. Israel is a place in which Investor Protection reigns supreme: The World Bank, in its annual "Doing Business" survey of 181 countries, ranks Israel fifth, alongside the U.S., Canada, and Ireland, and outranking the United Kingdom in the area of investor protection.
   

   Source: World Bank

6. For years considered an Emerging Market, Israel was recently upgraded by to a Developed Market by MSCI. Designed to represent the investable opportunity set for international investors, the MSCI International Equity Indices are the most widely used global benchmarks in the industry. Hence, Israel joining this select group of 23 other developed countries in the index indicates the international strength of the Israel economy and its stability. This important reclassification opens up investment by large, international funds that only invest in developed nations, which will increase the attractiveness and demand for Israeli stocks (and therefore increase their prices).
7. Although it is only 62 years old, Israel is a technology world leader in medical devices and technology, agricultural technology, bio-tech and military technology. Many of these Israeli companies are publicly traded, allowing shareholders to benefit from Israeli innovation.
8. Israel is a high-tech powerhouse: The country is a global leader in many high-tech sectors such as electronics, generic pharmaceuticals, biotechnology and aeronautics. Exports of products by the high-tech industry have grown at an annual rate of 8.5% in the last five years. Israel exports close to $20B in high-technology products. Israeli high tech contributes 17% to the business sector GDP and 32% to the export of goods and services.
9. U.S. President Obama’s drive for sources of alternative energy, coupled with like messages from global leaders, means Israel's alternate energy high-tech companies stand to gain. Israel remains among the biggest worldwide participants of water and clean tech technologies.
10. Israel invests heavily in R&D: The value of investment in research and development as percentage of GDP in Israel is the highest in the world. High R&D spending coupled with a highly skilled and educated workforce spawns hundreds of start-ups producing many successful commercial products. The country has the highest number of scientists and engineers per capita in the world, double that of the U.S. and Japan. Hence, one of the areas where Israel excels compared to other OECD (Organisation for Economic Co-operation and Development) countries is the Information and Communication Technologies (ICT) sector, which forms a considerable portion of exports. Little wonder that after Silicon Valley, Israel has the highest concentration of start-ups anywhere in the world.
11. Israel is a world leader in innovation: Israel has the largest number of companies listed on the NASDAQ outside of North America and China. Israel also leads the world in technology start-ups companies per capita, and has more start-ups than any country other than the U.S. This is very significant considering the country’s population (only 1/1000th of the world's population) is relatively small compared to many other countries such as India, China, Brazil, UK, France, etc. Over 130 Israeli companies are listed on Wall Street.
12. Israel has attracted the most venture capital investment per capita in the world, 30 times more than Europe. Israel is ranked in the top five Cleantech countries of the world, and operates the world’s largest desalinization plant. Israel leads the world in the number of scientists and technicians in the workforce, 63% more than the U.S. It also has the most physicians and engineers per capita. More Israeli patents are registered in the United States than from Russia, India and China combined (combined population 2.5 billion). It leads the world in patents for medical equipment. Israeli companies invented the drip irrigation system, discovered the world’s most used drug for multiple sclerosis, designed the Pentium NMX Chip technology and the Pentium 4 and Centrium microprocessors and created Instant Messenger (ICQ). Here's a great video about Israel's amazing achievements.

Prominent financial leaders endorse investing in Israel

1. Bank of Israel is doing a good job of Quantitative Easing - Ahmet Akarli, VP, New Markets Economics, Global Investment Research Division, Goldman Sachs: "Israel’s economic downturn during the crisis has been much milder than for its peers in the New Markets region, thanks in part to the aggressive and timely policy response of the Bank of Israel (BoI). The economy has already reclaimed output losses and is set to grow steadily in the coming few years. Inflation pressures remain relatively subdued and the likelihood of a large inflation overshoot from targets remains low, given the BoI’s commitment to ensuring price stability. We expect the Bank to continue to unwind its quantitative easing measures this year and bring rates to a more neutral 3 percent level by the end of 2010. We expect further Shekel appreciation as the Bank loosens its grip over the currency, consistent with recovery in the global and domestic economy."
2. In a December 2009 report titled “Playing Defense”, Bank of America Merill Lynch recommended Israel as an attractive investment destination and recommended companies, especially in the banking and telecom sectors. According to Merril Lynch, some of the reasons for investing in Israel included the strong currency vs. the U.S. dollar, the resilient economic performance among other emerging markets and the strong leadership performance shown by the Bank of Israel and the Ministry of Finance in handling the economy.

Sources: Central Bureau of Statistics (CBS), Ministry of Finance, Bank of Israel, International Monetary Fund, Vale-Columbia Center on Sustainable International Investment, Government of Israel Economic Mission, Tel Aviv Stock Exchange and others

Next in this series: our article

How can I invest in Israel?

There are many ways to invest in Israel or Israeli companies, from buying Israeli stocks on Wall Street, ETFs or mutual funds, bonds, or investing directly on the Tel Aviv Stock Exchange from an Israeli investment account. You can read more about our article for more details.

Keep checking back on Wise Money Israel (or get email updates) to gain more insight and tips on how to wisely invest in the Israeli capital market.

The post Foreign Investors Like Israeli Financial Market appeared first on Wise Money Israel.

Top reasons to invest in Israel

1. Wise investors want international exposure and they know that Israel is an attractive investment destination. Foreign investors have been earning very good returns in the Israeli capital market.
2. Many people consider the compelling biblical reasons to invest in Israel as their guide when it comes to linking their money with the country.
3. Successful investors recognize Israel's economic strength, reaffirmed by its stability in the recent global financial crisis. It's a good place to put your money compared with the U.S., Europe and other developed markets.
4. As a smart investor, you should hedge against the weakening of your own currency by holding other strong currencies in your portfolio. Investing in Israeli securities ensures that all your eggs are not in one basket.
5. Investing in Israel connects you to the land and people of Israel and gives you a stake in its future growth.
6. It's a practical step that tells your children that Israel is important to you, because actions speak louder than words.
7. By investing in Israeli companies through stocks or corporate bonds, you support Israel, its people and its economy.
8. In these turbulent times, it is smart to have some capital outside of your country and currency because during severe economic crises, governments sometimes prohibit transferring capital out of the country.
9. Jewish families around the world need to be prepared because antisemitism is rising. It is imperative to learn from history and link a portion of your wealth to Israel.

Next in this series: our article

How can I invest in Israel?

There are many ways to invest in Israel or Israeli companies, from buying Israeli stocks on Wall Street, ETFs or mutual funds, bonds, or investing directly on the Tel Aviv Stock Exchange from an Israeli investment account. You can read more about  our article for details.

Keep checking back on Wise Money Israel (or get email updates) to gain more insight and tips on how to wisely invest in the Israeli capital market.

The post Should I Consider Investing in Israel? appeared first on Wise Money Israel.

Principle #1: God blesses Israel

From the time of its earliest history, Israel has been blessed by God. “The Lord spoke to Moses: ‘Tell Aaron and his sons, “This is the way you are to bless the Israelites. Say to them: ‘The Lord bless you and protect you; the Lord make his face to shine upon you, and be gracious to you; the Lord lift up his countenance upon you and give you peace.’”’ So they will put my name on the Israelites, and I will bless them” (Numbers 6:22-27).

God promised this blessing from the foundation of the people of Israel, through the forefathers. He said to Isaac, Jacob’s father: “I’ll bless you and make your children flourish because of Abraham my servant” (Genesis 26:24).

At one time an enemy of Israel, the King of Moab, decided to hire a seer to curse Israel. But, the seer Balaam couldn’t curse Israel, saying, “How can I curse one whom God has not cursed, or how can I denounce one who the LORD has not denounced? … Indeed, I have received a command to bless; he has blessed, and I cannot reverse it” (Numbers 23:8, 20). “Now Balaam saw that it pleased the LORD to bless Israel” (Numbers 24:1).

Throughout the Scriptures God indicates he will prosper the people of Israel: “The LORD remembers us and will bless us: He will bless the house of Israel” (Psalm 115:12).

We can imitate God who blesses Israel, by blessing Israel ourselves. There are many ways to do that. One good way you can choose to bless Israel is to invest in its companies and endeavors. If you are already saving and investing your money, you can take a stand and reallocate some of your investment portfolio to Israel. By doing this, you are casting your vote to bless Israel because you are backing the Israeli economy, strengthening its companies and aiding the financial achievements of its people. This is a very powerful step that makes a difference.

It’s not all about Israel, however. The Bible has much to stay about those who choose to bless Israel:

Principle #2: God blesses those who love and bless Israel

The Bible is clear when it comes to God’s promises for those who bless his people. God blesses those who bless Israel. These promises are repeated throughout Scripture:

“How beautiful are your tents, O Jacob, and your dwelling places, O Israel!... Blessed is the one who blesses you, and cursed is the one who curses you!” (Numbers 24:5, 9). Blessing is promised to those who bless Abraham and his descendants: “I will bless those who bless you, and whoever curses you I will curse; and all peoples on earth will be blessed through you” (Genesis 12:3). The lover of Jerusalem prospers: “Pray for the peace of Jerusalem! May those who love her prosper!” (Psalms 122:6)

We see that God is in the business of blessing us, when we are obedient to him and follow his divine principles.

Principle #3: The nations will be blessed through Israel

Jerusalem Golden Gate (Steven Conger)

As the Jewish people are beginning to return to the Lord, the nations will be blessed through Israel. The Bible says that. “Abraham will surely become a great and powerful nation, and all nations on earth will be blessed through him” (Genesis 18:18). God continues to make promises to Abraham about the people of Israel saying: “And through your offspring all nations on earth will be blessed, because you have obeyed me” (Genesis 22:18). “If you will swear by my name alone, and begin to live good, honest lives and uphold justice, then you will be a blessing to the nations of the world, and all people will come and praise my name” (Jeremiah 4:2).

We are living in exciting times, because in our lifetime a major historical event, tied to biblical prophecy, has occurred – the rebirth of the nation of Israel in its land. This event is important because there are promises related to the blessing of Israel when they are in possession of the land:

Principle #4: Israel’s blessing is tied to being in their land

Olive Tree (by LaRezistance)

In this past century, God has begun to miraculously return his people to the Land of Israel as spoken of in Ezekiel 37:1-14 in the vision of the dry bones. Jeremiah too, describes God’s promise to restore the people of Israel back to their land. “The Lord God of Israel who rules over all says, ‘I will restore the people of Judah to their land and to their towns’” (Jeremiah 31:23).

As God continues this historic work to regather the Jewish people, he will restore the wealth promised to Jacob: “I will restore the fortunes of Judah and the fortunes of Israel and will rebuild them as they were at first… all the nations of the earth which will hear of all the good that I do for them, and they will fear and tremble because of all the good and all the peace that I make for it” (Jeremiah 33:7,9). Zechariah also speaks of this historical turn of events and its favorable results for Israel: ”Thus says the LORD of hosts, ‘My cities will again overflow with prosperity, and the LORD will again comfort Zion and again choose Jerusalem’” (Zechariah 1:17).

God’s blessing on his people is connected to their being in the land God promised them: “The LORD your God will bless you in the land you are entering to possess” (Deuteronomy 30:16). “Stay in this land. Then I will be with you and will bless you, for I will give all these lands to you and to your descendants, and I will fulfill the solemn promise I made to your father Abraham” (Genesis 26:3).

Israel will be prosperous when the people are back in their land. The question is: are we participating in the blessing? God is, in fact, again blessing Israel as it returns to its land. By investing in Israel, you can take part in this End of Days ingathering, and God’s promised blessings to those who love Israel.

Principle #5: God stands with Israel

It is wise to invest internationally in countries that are secure. It is evident throughout the Scriptures that God defends Israel. This can be seen even in modern times when Israel has been attacked by its neighbors. Israel is precious to God – “for he who touches you, touches the apple of His eye” (Zechariah 2:8). “Indeed, he who watches over Israel will neither slumber nor sleep.” (Psalm 121:4). “Yet their Redeemer is strong; the LORD Almighty is his name. He will vigorously defend their cause” (Jeremiah 50:34).

The security of Israel is defended by God. Therefore we can feel secure in Israel and in investing in it.

Principle #6: God judges the nations concerning Israel

Because God stands with Israel and is concerned with its security and blessing, his judgment is coming on the nations, on those who do not stand with Israel. “I will gather all nations and bring them down to the Valley of Jehoshaphat. There I will enter into judgment against them concerning my inheritance, my people Israel, for they scattered my people among the nations and divided up my land… Let the nations be roused and let them go up to the valley of Jehoshaphat, for there I will sit in judgment on all the surrounding nations” (Joel 3:2, 12). “The day of the LORD is near for all nations. As you have done, it will be done to you; your deeds will return upon your own head” (Obadiah 1:15). “For the day is near, the day of the Lord is near; it will be a day of storm clouds, it will be a time of judgment for the nations” (Ezekiel 30:3).

The Gathering Storm (Dennis Wong)

God will soon punish the nations, especially those who come against Israel. It is becoming more apparent in these days that the nations of the world are coming against Israel. Even the United States, a long-time friend and ally, is making significant, unfavorable changes to its policies and actions against Israel. God’s judgment will surely have significant financial implications for these nations.

Biblical wisdom suggests that you can assure your own fate is different to the fate of your nation when it comes to God’s judgment regarding Israel. For example, Rehab, who hid the Israelite spies in Jericho, sided with Israel through practical actions, and was saved from her city’s destruction (Joshua 2, 6:17, 23-25).

By making personal financial choices that side with Israel, you may save yourself and your family from your nation’s financial fate.

Principle #7: Israel’s financial security and role in global finances

Israel is destined to be an important world financial center; a lender nation. In these global rocky financial times, where governments are borrowing money internationally, and risking the standing of their country with regards to their world economic status, God says about Israel: “For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow from none…” (Deuteronomy 15:6).

For decades, sound investment advice was to invest in financial institutions, as they control the flow of money and lend. It is even wiser to invest in lender nations. “The LORD will open the heavens, the storehouse of his bounty, to send rain on your land in season and to bless all the work of your hands. You will lend to many nations but will borrow from none” (Deuteronomy 28:12).

When the world economic system fails, many great countries will seek the blessing of God in Israel. “Many peoples and powerful nations will come to Jerusalem to seek the Lord who rules over all and to ask his favor” (Zechariah 8:22).

Principle #8: International exposure and diversification

Not only is it sound investing to diversify your holdings internationally, but it’s also scriptural.

Image by CIMMYT

“Send your grain overseas, for after many days you will get a return” (Ecclesiastes 11:1, Net Bible). Some scholars suggest that the imagery of the grain dealt with commercial business through international trade. This same verse advises investment diversification: “Divide your merchandise among seven or even eight investments, for you do not know what calamity may happen on earth” (verse 1). The chapter goes on to state:

“Sow your seed in the morning, and at evening let not your hands be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well” (Ecclesiastes 11:6). Solomon shares his God-given wisdom with us regarding how we should invest. He tells us it is unwise to invest heavily only in one market, one country, one currency or one investment. Investing in a country with God’s blessing is a wise way to get international exposure, portfolio and currency diversification.

Conclusion

There are many reasons to invest in Israel. The Bible teaches us that Israel will be blessed, and that helping Israel brings blessing on oneself and one’s own nation. Israel is back in its land. This is a sign that its prosperity will be restored and it will once again be financially wealthy: a lender to many nations. You can make an impact on your own financial life and take advantage of biblical principles regarding what God promises for those who bless Israel.

Here are some related articles on how you can invest in Israeli stocks and bonds:

• Open my Israel Investment Account: where?
• Should I Consider Investing in Israel?
• Israeli Stocks on Wall Street

The post What God Says About Investing in Israel appeared first on Wise Money Israel.