FTSE Group has granted Israel "developed'' status, which will enable
the Tel Aviv Stock Exchange (TASE) to attract more from the estimated
$2-2.5 trillion in funds that track the FTSE indices.
"Bloomberg" quotes Citigroup Israel head of trading Neil Corney as
saying, "This is a positive. It's going to mean that more
international investors will be able to invest in Israel.''
"Bloomberg" adds that shares including Teva Pharmaceutical Industries
Ltd. (Nasdaq: TEVA; TASE: TEVA) may be affected as investors who
benchmark against the indexes, buy or sell to reflect today's
announced changes, which take effect from June 2008. Most funds are
restricted to investing in developed markets because of their
perceived lower risk.
FTSE Group said that the FTSE Policy Group found that "Israel meets
all quality of markets criteria for a developed market and has done
so since being included on the Watch List in 2006. A new FTSE Index
for developed markets in Europe, Middle East and Africa will be
introduced for those investors wishing to integrate Israel within
their existing Developed Europe portfolios.
"Bloomberg" says, "Israel took steps in the past two years to raise
its profile among foreign investors and increase the perception that
its $140 billion economy was ready for upgrade to developed status."
"Bloomberg" adds, "The Tel Aviv index has almost tripled in the last
four years, as the economy marks its fifth year of growth. New
foreign investment in exchange-listed securities in the first half of
this year reached $967 million, compared with $2.1 billion for all of
2006, according to the Bank of Israel.
"FTSE's requirements also include a wealth test, which Israel met as
gross national income per capita rose to $18,620 in 2005. The World
Bank classifies any country with ``high'' income to have Gross
National Income of at least $11,116."
Commenting on FTSE's upgrade of Israel to developed market status,
Merrill Lynch reports that the Israeli market can expect a large
inflow from investors in developed markets, while outflows should be
small.
"We learned at our meeting with FTSE that they expect net inflows of
US$2-3 billion from developed market investors into the Israeli
market," according to Merrill Lynch analysts.