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Israel’s well-documented economic optimism

Straight from the Jerusalem Boardroom #233

  1. PepsiCo concluded the acquisition of Israel’s SodaStream for $3.2BN (Globes Business Daily, Dec. 6, 2018). The Chicago-based Thoma Bravo acquired Israel’s Impreva Cyber Security for $2.1BN (Globes, Oct. 12).
  2. Venture capital investment in Israel has grown systematically since 2008, reflecting the steady growth of Israel’s economy. 2018 is expected to score a new record of investment in Israeli startups – $6BN, compared to 2017 – $5.5BN, 2016 – $5BN and 2015 – $4.7BN. The last ten years have produced the highest level of Israeli exits, including a $15.3BN by Mobileye, which was acquired by Intel. The last ten years have yielded an unprecedented potential of Israeli startups – which, unlike prior years, are not rushing into tempting exits – to evolve into substantial hightech companies. Israel’s time-to-market and time-to-exit is substantially shorter than Europe’s, partly generated by the military experience of Israel’s entrepreneurs (Globes, Dec. 12, Oct. 30, Aug. 1). Israel’s Innovation Authority has concluded a series of agreements with global high tech giants, such as Intel, Audi, Abbott, Unilever, Hewlett-Packard, IBM, Panasonic, Philips, Nielsen, Fujitsu, Renault, England’s Reckitt Benckiser, etc. – to identify ground-breaking Israeli technologies (Globes, Nov. 29).
  3. Microsoft, Nokia, Cisco, AT&T, Ireland’s Accenture, Singapore’s Temasek Holdings, Bessemer Venture Partners, Eric Schmidt’s Innovation Endeavors, Japan’s Softbank, Walmart, Europe’s Airbus, Moody’s and Britain’s Barclays Bank invested in Israel’s Team8 Cyber Security venture capital fund. Temasek acquired Israel’s Sygnia Cybersecurity startup, which was on Team8’s portfolio ($4.3MN), for $250MN (Globes, Oct. 24). Intel Capital led a $12MN round of private placement by Israel’s Seamless Network cyber security startup (Globes, Nov. 15).
  4. Hewlett-Packard’s Chief Technology Officer, Shane Wall: “HP values Israel as a major platform of innovative technologies, which are targeted for investment by HP Tech Ventures (especially in the areas of digital production, artificial intelligence and cyber security). HP has been in Israel for 30 years, employing 3,000 persons.”
  5. South Korea announced its intention to acquire ($292MN) two early warning radar systems, which are developed and manufactured by Israel’s ELTA Systems, a subsidiary of Israel’s Aerospace Industries (Reuters, Nov. 27). Israel’s Aerospace Industries has concluded an agreement with South Korea’s Hankuk Carbon for the joint development and manufacturing of unmanned aerial vehicles. The 2018 Israeli export to South Korea (around $600MN) was 36% higher than 2017, mostly medical, chemical and metal products.  During 2018, Israel’s import from South Korea was around $900MN, mostly machinery and cars.  A free trade agreement is negotiated between Israel and South Korea (Globes, Oct. 24).  According to Avi Jorisch, author of Thou Shalt Innovate: How Israeli Ingenuity Repairs the World, Israel and South Korea are natural partners, having become regional economic superpowers due to their brain-power, which compensates for their limited natural resources. They are relatively young, born out of war and living under constant military threat, which has induced much tenacity and innovation (The Korea Herald, October 24).
  6. While China’s investments overseas have recently declined, China’s investments in Israel have not. During the last five years, the most active Chinese investors, in Israel, have been Horizons, CE, GoCapital & EOC, Radiant and Alibaba Capital. Chinese investments have accounted to 12% of the overall investment in Israeli startups, compared with 7.5%-9% during 2015-2017 (Globes, Oct. 30).
  7. According to the Nov. 8 issue of the London Economist intelligence Unit, “Israel begins the process of auctioning off 19 oil and natural gas exploration blocks off the country’s Mediterranean coastline…. 854BN cubic meters of proven natural gas reserves have been discovered and some of them have been extracted…. Israeli firms have signed contracts to sell natural gas to Egypt and Jordan….”



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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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