Foreign investment on TASE plummets
Chased away by social protest? Head of Deutsche Bank trading room says foreign activity currently 10% of the exchange's turnover as oppose to 20% in beginning-middle of year
Along with the declines, turnovers dropped as well and last month. There were several days in which the turnover was a mere NIS 600 million (about $162 million).
Shrinking turnovers are attributed, among other things, to the passivity of local investment bodies, but more than that to the upgrading of Israel to a developed market on May 26, 2010.
"We just got back from a Deutsche Bank symposium on developing markets (although Israel has not been in that category for a year now). We brought together a number of Israeli companies and introduced them to investors," head of the Deutsche Bank trading room, Hadar Oshrat, told Calcalist.
"There was a sense of inconsistency between what the companies showed the investors in their presentations and their performance as it is presented on the tickers. Needless to say the situation on the stock market seems horrific."
Oshrat added, "We think that geopolitical events affect the situation in Israel, but this is less dramatic. There are three fronts that foreign investors take into account: The Palestinian issue, tensions with Turkey and relations with Egypt.
"Right now, their response to the geopolitical situation is a lack thereof. Foreign investors just aren’t responding to these events. One might say that the political events have less influence over foreign investors in Israel, and that the macro picture as reflected in the protests is far more significant."
Substantial declines in foreign activity
"There is a steep decline in foreign activity in Israel's economy. According to my estimation, foreign investments account for 10% of TASE's turnover.
"In the beginning-middle of the year, turnover was 20% as compared with 40% last year, before the upgrade to the status of a developed market on the MSCI; however, in the past two weeks, we see nearly a complete standstill in foreign activity in Israel," said Oshrat.
Haim Israel, VP research developing markets at Merrill Lynch, has a somewhat different approach but not entirely.
"There is a decline in activity. I don’t think we've seen anything different in the past month. The foreigners showed mild interest in the social protest. Their interest in Israel is based on three issues: will the budget exceed its framework, the stemming of the economy's privatization and the affects of Israel's rating upgrade."
Click here to read this report in Hebrew
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