Israel Financial Update – April 2011

WMIArticles, Invest in Israel, News Leave a Comment

March 2011 saw a nearly 3% gain in the Shekel against the dollar. Foreign investors who opened an Israeli investment account in Shekels two years ago would have gained 21% already just on their dollars without counting any gain from their actual investments.

Israel's Central Bank raised yet again its interest rate an additional 1/2% to 3% last week. This creates a 3% yield advantage over similar U.S. bonds. Experts are predicting the prime interest rate could rise to 5 1/4% by the end of 2012. Israel government bonds are currently yielding 3.1% to 5.7% per year, and corporate investment-grade bonds now yield up to 9.2%.

Israel's unemployment dropped to a three-year low rate of 6.1% (January 2011 reading). The increased workforce may partially account for the updated Israeli economy growth forecast of the Bank of Israel, which predicts a high 4.5% GDP for this year, after the economy grew faster than expected last year. Comparing the high unemployment of the U.S. (8.9%) and its lower GDP estimate (2.8%) may account for some of the Shekel strength we've seen recently.

In stock news, Israel Chemicals revenues rose 25% in 2010 to $5.7 billion. Israeli investment house Psagot analyst Limor Gruber said that the results were surprisingly strong, and that the outstanding sectors were those which have the potential for future growth - potash (mined salts) and industrial products. This stock paid a 6% dividend in the last year (read more on Israeli dividend stocks), in addition to a 28% gain in the past 12 months. Also, the popular grocery chain Rami Levi continues to soar, already gaining 22% since the beginning of 2011. Another 50 Israeli stocks have gained over 20% in the past quarter: contact us for more information on these companies.

Israeli pharmaceuticals giant Teva and Procter & Gamble will create a new alliance in the field of over-the-counter (OTC) products. The agreement will see Procter and Gamble ally its brand-building and marketing capabilities with Teva's experience in research, development and manufacturing in order to create a new market leader. It is expected that the collaboration will lead to the creation of new products and expand the global reach of both companies' existing offerings. The partnership should capitalize upon and further stimulate the growth of the OTC sector, which is being driven by the rising importance of health and wellness among global consumers. Teva is currently Europe's largest generics manufacturer, while Procter and Gamble's diverse business interests allow it to reach 4.2 billion global consumers.  You can read more about Teva here.

In an address to the International Tourism Conference, Prime Minister Binyamin Netanyahu said he hoped to open direct flights to the Galilee region to develop Christian tourism there. “I watch a lot of late-night TV, and I watch the Evangelical churches, the television churches, and they call on people to come to ‘Bible Land’ in Tennessee or Kansas,” Netanyahu said. “This is the real Bible land; it’s not made of plastic, it’s real and you can see the actual places where these events took place.” Netanyahu added that tourism and hi-tech were the two most important sectors for developing and expanding the country’s economy.

Vice Premier Silvan Shalom presented his plan in March to move the Israeli weekend to Saturday and Sunday. Should this plan be enacted, it would allow Israelis to have a two-day weekend, align Israeli capital market hours to those abroad, and expand economic activity.

Leave a Reply