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Israel-Hamas clash: A limited impact on Israel’s economy (Long-term global confidence in Israel’s economy)

1.  The Atlanta-based NCR, the global leader in retail software and services, acquired Israel’s Retalix for $800MN (Globes Business Daily, November 30, 2012).

2.  The Larchmon, NY-based Bessemer Venture Partners led – along with the London-based Index Ventures and the Palo Alto-based Accel Partners – a $25MN round of private placement in Israel’s MyHeritage (Globes, November 30).  Telefonica de Espana, the Spanish telecommunications giant, led – along with Singapore’s SingTel, the Mountain View, CA-based Mozilla Firefox, the Hong Kong-based Li Ka-Shing’s Horizons Ventures and the Menlo Park-based Draper, Fisher, Jurvetson – a $25MN round of private placement in Isreal’s EveryThing.ME (November 30).  Li Ka-Shing’s Hutchison acquired Israel’s technology incubator, Kinrot (Nov. 12).

3.  Britain’s BrightSource and France’s Alstom won tender for 121 Megawatt solar thermal power plant in Israel.  The scope of the expected investment is $650MN (Globes, November 19). 

4.  Italy’s (giant) Edison Energy follows in the footsteps of Noble Energy, entering Israel’s natural gas exploration, concluding a contract with Israel’s Ratio Oil Exploration.  Under the agreement, Edison will be the well-operator for the Gal licenses – which covers 1,770 square kilometers in the southwest corner of Israel’s exclusive economic zone with high potential of oil and natural gas – with 20% of the rights in the permit’s two licenses and an option on another 20% (Globes, Nov. 25). 

Substantial Norwegian energy companies – such as SubSea7 and SeaDrill – consider participation in Israeli explorations. Currently, Norway’s AGR operates in Israel (Globes November 21). 

5.  Len Rosen, CEO of Britain’s Barclays Bank in Israel: “I have been in Israel during the last six years, but the only real violent event which I witnessed was September 11 in NYC…. I have not noticed a decline in the global interest in Israeli companies as far as Mergers and Acquisitions and investments in stock and bonds.  I have noticed a decline in the scope of foreign investments, which is a derivative of a global decline… and global uncertainty…. There is a global decline in M&A due to the European crisis and American uncertainty….While security-oriented events have had a limited impact on Israel’s economy, the significant impact has been caused by global financial events…. Israel benefits form a sustained flow of investments and acquisitions…. Israel’s high tech and healthcare are unique, and its recent energy explorations and expansion of infrastructures are common…. Israel’s Treasury and Central Bank have displayed fiscal responsibility (Globes, November 23).”

6.  Precedents to the limited, short-term impact of military clashes upon Israel’s economy.  The Tel Aviv Stock Exchange registered a 3% decline upon the launching of the 1982 war on the PLO in Lebanon, but surged 5% (net) two months later.  The August 1990 Iraq’s invasion of Kuwait caused a 14% drop on TASE with a 16% (net) increase two months later. During the September 1996 Palestinian riots (following the inauguration of the Western Wall Tunnels), TASE declined 6%, but rebounded 5% (net) two months later. September 11, 2001 depressed TASE by 11%, followed by a 23% expansion two months later.  During the 2006 war on Hizballah in Lebanon, TASE suffered an 8% decline, but two months later demonstrated a 16% (net) increase.  The December, 2008 Operation Cast Lead against Hamas in Gaza triggered a 10% fall on TASE, which turned around with a 25% surge  two months later (Ma’ariv daily, November 18). 

 

 




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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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