Just what makes Israel’s economy so incredibly interesting and attractive
Yesterday, I reported on Jerusalem’s miraculous economic turn around. As for Israel’s national economy, well:
- Over 50% of the country is a desert, and yet it is a high-tech powerhouse.
- The country was born in a geopolitical mess and has remained there ever since.
- The electorate is burned by an over zealous political system, now facing its third general election within 12 months.
Now get this:
As reported by Bloomberg, the Tel Aviv stock market rose to a record high this week.
The TA-35 … extended its increase in the past 12 months to 15%. The benchmark is mostly composed of financial, health care and real estate companies, and Israel’s is the only equity market in the Middle East classified as developed by major index compilers.
……. A combination of low interests rate and optimism over economic growth is helping stocks, analysts said.
Eyal Dabby is the head of equity research at Bank Leumi Le-Israel in Tel Aviv.
GDP is expected to grow above 3%, and inflation is very low. Unemployment is also at the lowest level. It is a strong economy with fair pricing and very low interest rates. The combination of all these parameters is supportive for the equity market…..It is difficult to predict what will be the exact market performance in 2020, but if nothing special happens, especially in the U.S., to which the Israeli market is highly correlated, the equity market could continue to deliver between 8%-10% gains on average.
These statements come on the back of a very strong year for the high-tech sector in Israel.
The total value of Israeli exits in 2019 reached $21.7 billion in 138 deals including the $6.9 billion acquisition of Mellanox by Nvidia, which is still subject to closing. This figure is up sharply from $12.6 billion in 2018. The total value of exits of up to $5 billion in 2019 was the highest ever, with $14.84 billion in 2019, compared with $12.63 billion in 2018.
Now imagine if there had been a stable and effective government in power for the past 18 months. Would that have improved things even further?