Israel won last week a “developed” status from FTSE Group, enabling its stock market to attract more of the estimated $2.5 trillion in funds that track the index provider's global benchmarks.
The Financial Times Stock Exchange Group, a joint venture between the Financial Times and the London Stock Exchange, will promote Israel from emerging market status to its developed market group as of June 2008.
The reclassification of Israeli stock indexes, which will put Israel
in a class of 24 developed nations, makes it the first Middle Eastern country to make the grade.
The re-classification from emerging to developed market potentially opens up a larger pool of investor cash for Israeli stocks as many international funds are restricted to investing only in developed market equities.
Country classification criteria are based on the quality of market indicators such as regulatory environment, custody and settlement arrangements, the efficiency of the dealing landscape and the derivatives market.
Finance Minister Ronnie Bar-On said following the announcement that "Israel has a strong investment environment, which has made significant changes to its regulations, investment procedures and systems, enhancing international investors' access to its market."
Shmuel Ben Tovim, Israel's economic attaché to the UK, added that the change is likely to inspire other index compiling firms to reconsider Israel's status, and also to have a positive effect on local markets.
Reprinted with permission of The Israel Export and International Cooperation Institute
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