Teva Pharmaceuticals - topping everyone's lists for 2007
צילום: סבאסטיאן שיינר
German bank recommends Israeli investments
Deutsche Bank analysts note low interest, drop in unemployment, low inflation in Israel's favor. Iranian threat factored in as central threat
The Israeli market will continue to grow in 2007 and is expected to reach 5 percent, so say analysts for German investment giant Deutsche Bank in their guide to developing markets (the Middle East, Africa and Eastern Europe – with the Mideast among the most recommended markets to invest in 2007).
Deutsche cites the low interest rate in Israel, which they say has the potential to decline even further, a drop in both unemployment and inflation rates coupled with strong Shekel (NIS) as the primary reasons for their positive projections regarding the Israeli market.
Regarding the low interest rate Deutsche estimates that the first half of 2007 may see a further 0.5 percent drop.
“There can be little doubt that the macroeconomic environment provides a strong backdrop for equities, with over 5 percent GDP growth, low rates with a potential for a further 50 basis points cut in the first half, a non-inflationary environment, a current accounts surplus, declining debt to GDP ratio, falling unemployment, and strong shekel outlook," Deutsche Bank said of the Israeli market.
Deutsche's top five stock picks for 2007 are Teva Pharmaceuticals, Bank Hapoalim, Makhteshim Agan Industries, Alyarion Ltd. and Israel Discount Bank.
The investment bank also recommends the retail branch as a solid investment, singling out Strauss-Elite, Blue Square Israel, Super-Sol, Osem and Delek Automotive Systems.
Africa-Israel Investments and Danya Cebus – a subsidiary of Africa-Israel - are both noted as recommended infrastructure companies, with Deutsche calling Lev Leviev's Africa-Israel a major player in awakening markets due to the company's massive business in Russia.
The local banking industry is also noted, with a recommendation for Mizrahi Tefahot and Israel Discount and Hapoalim making the top-five. Deutsche notes however that both Bank Hapoalim and Bank Leumi will struggle with growth difficulties in the market this coming year – despite the strong economy.
Deutsche notes that 2006 has proven that economics have a stronger effect on the market than political or regional events.
Iran will have global effect
“In our view, 2007 will be a more volatile year for EMEA (Europe, the Middle East and Africa), with an anticipated upside of only 13 percent,” the guide said.
However regional threats are also taken into account by Deutsche, who factor in rising tensions with Iran but say that any effect Teheran might have is most likely to be on a global scale and not necessarily only the local one.
