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Global confidence reaffirmed in Israel’s economy

Straight from the Jerusalem boardroom #235

  1. Israel’s most successful ever government bonds issue totaled 2.5BN Euros: 1.25BN 10-year bond and 1.25BN 30-year bond. The European demand was six times the amount of the bond issued (15BN Euros!) in spite of the low interest rate – 1.5% for the 10-year bond and 2.5% for the 30-year bond – reflecting confidence in Israel’s economy, Israel’s responsible management of its economy and Israel’s solid bond-repayment track record. Some 300 investors from Britain, Germany, France and other European countries – including European Central Banks, pension fund and insurance companies – participated in the bond issue. At the same time, Saudi Arabia had to increase its interest rate to 3%, in order to raise 3BN Euros (Globes Business Daily, January 10, 2019).
  2. Israel surged to 5th place in the latest Bloomberg Innovation Index, 2019, trailing South Korea, Germany, Finland and Switzerland, ahead of Singapore, Sweden, USA, Japan, France, etc. Israel was 10th in the 2018 Index. In 2019, Israel is the only country ahead of South Korea in the category of research & development expenditure as a percentage of GDP (4.3%). Israel’s major surge is in the area of patent activity – from 19th spot in 2018 to the 4th spot in 2019. The Bloomberg Innovation Index ranks the globe’s 60 most innovative countries according to the following criteria: GDP, productivity, patent activity, concentration of researchers, postgraduate PhD students engaged in research & development per 1-million people and concentration of high-tech companies (Globes, January 22).
  3. The largest ever Japanese delegation of 200 senior executives of 100 leading Japanese corporations, including Mitsubishi and Toshiba, along with Japan’s Minister of Economic Affairs, visited Israel, exploring ways and means to expand bilateral trade and investment. In 2018, Israel’s export to Japan grew 42% to $1.16BN, mostly medical, optical and metal equipment and products. Since 2014, Japanese companies have made over 200 venture capital investments in Israel’s high tech sector. However, Japan – the world’s 3rd largest economy – accounted for only 2% of foreign investment in Israel during the past five years. In addition to commercial high tech, Japan is increasingly interested in cooperation and acquisitions in the areas of defense and homeland security. Israel’s innovation track record has enticed dozens of Japanese companies to explore the potential of research, development and production cooperation with compatible Israeli companies. Japan’s and Israel’s Economic Ministers signed an agreement, enhancing digital health cooperation, teaming substantial Japanese corporations and ground-breaking Israeli startups. Another agreement highlights the matching of Israeli innovations (e.g., artificial intelligence, cyber technologies) and Japanese manufacturers, targeting the Japanese market. A leading Israeli venture capital fund, Vertex, has benefitted from hundreds of millions of dollars, invested by 31 Japanese investors, including financial institutions and major corporations (Globes, January 17).
  4. The $17BN US private equity fund, Thoma Bravo, acquired Israel’s cyber security Imperva for $2.1BN. Imperva, which was established by Israeli entrepreneurs and developers, is headquartered in the Silicon Valley with its major research & development center in Israel, which employs 450 persons (Globes, January 14).
  5. The South Korean Conglomerate, Samsung, is finalizing the acquisition of Israel’s Corephotonics (smartphone camera technologies) for $150MN. Samsung Ventures has already invested in 15 Israeli companies (Globes, January 8).
  6. In 2018, Israeli startups raised a record $6.4BN, 17% higher than 2017 ($5.5BN) and 120% higher than 2013 ($2.95BN), although the number of startups involved has decreased slightly. The last quarter of 2018 produced a new record of $1.8BN, raised by Israel’s high tech companies. The $5MN investments have decreased in number, while the number of the $20MN+ investments has increased. Israeli software companies’ capital raising has grown over 50% since 2015. 2018 was the strongest year for Israeli cybersecurity companies, which raised $1BN. Artificial Intelligence companies have sustained their uptrend valuations. The growing maturity of Israeli startup companies is attracting a growing number of global corporations, venture capital funds and individual investors. For the first time since 2013, the number of follow-on investments has exceeded the number of first-time investments. (Globes, January 10).

 

 




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Israel’s Covid-19 Economic Trends

Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

Foreign investment in Israel’s high-tech companies surged to new heights in the 1st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4th quarter of 2020 and double the volume of the 1st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

  1. Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
  2. Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
  3. Israel is ranked 12th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
  4. The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
  5. Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
  6. In 2020, Israel was ranked 20th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
  7. Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
  8. Israel’s foreign exchange reserves-to-GDP ratio of 41% (3rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
  9. During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
  10. Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

 




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