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Analysts: Israel to be attractive developed market
Author  Reuters

 

Analysts: Israel to be attractive developed market

Deutsche Bank says although Jewish state will be alongside world's richest economies, its growth characteristics will keep more in line with emerging market

Reuters

 

Published: 

05.19.10, 10:28 / Israel Business

 

 

 

Israel will be an attractive investment after its upgrade from an emerging to a developed market this month in the MSCI Index, analysts say.

Deutsche Bank said this week that although Israel will be alongside the world's richest economies, its growth characteristics will keep more in line with an emerging market.

"(Israel) can offer active developed market investors the opportunity to enjoy emerging style growth and performance without having to invest off-index," the bank said in a report.

Index compiler MSCI announced last June it would include Israel in its World Index and its EAFE Index, the third such upgrade in its history.

When the May 27 reclassification takes effect, passive investors in emerging markets will have to sell Israel holdings. It may take time for developed market funds to take their place.

"The Israeli economy is in relatively good shape. For a developed market investor, Israel would be quite an attractive place," said Andrew Brown, an investment manager at British firm Aberdeen whose emerging market fund has about $700 million in Israeli companies.

"These stocks are of relatively good value," he told Reuters. "We will not rush to sell them."

Foreign investors surveyed by Thomson Reuters Extel in March said the biggest challenge to the Israeli market would be the shift from comprising about 3% of MSCI's emerging markets index to some 0.4% of its developed market index.

Fidelity International's Nick Price, portfolio manager of the Emerging Europe Middle East and Africa Fund, said the switch will not have any effect on his fund because of Israel's size.

"I will stay with stocks that I like and I believe that most people will do the same," he said.

 

Top-heavy market

A Citigroup report said $2.8 billion in passive outflows were expected from Israeli stocks with the change – but eventually would be more than offset by inflows of $3.6 billion.

Foreign investors already hold nearly 30% of Israeli equities, mostly in top companies like Teva Pharmaceutical Industries, Israel Chemicals, Bezeq Israel Telecom and the largest banks, Leumi and Hapoalim.

UBS and Merrill Lynch also view the move as a short-term negative with a more positive long term.

The Tel Aviv 25 index hit an all-time high last month of 1,237.85 points, buoyed by strong economic growth. It has eased back to 1,162 with the global decline in stocks.

The country recovered relatively quickly from the global crisis, its economy expanding at an annualized 4.8% rate in the fourth quarter and 0.7% for all of 2009. The central bank predicts growth of 3.7% in 2010.

 

Israel was also invited to join the Organization for Economic Cooperation and Development (OECD) this month.

The Bank of Israel said that while there is a chance of an ebb in passive inflows, in previous upgrades there was no evidence of a significant drop in the volume of investment.

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Israel accepted into OECD
 Israel accepted into OECDFinance minister says new membership is 'stamp of approval', will attract foreign investments Zvi Lavi  Published: 05.10.10, 13:16 / Israel Business    The Organization for Economic Development and Cooperation (OECD) accepted Israel into its ranks Monday during a vote, as its 32nd member. Finance Minister Yuval Steinitz, currently in China, received an unofficial message from the organization, and an official statement will be made in Paris in the afternoon. The official invitation is to be handed to Steinitz at a convention of the OECD's finance ministers in Paris at the end of the month. Slovenia and Estonia were also accepted as members Monday. "The significance of this is huge and that is why, as a matter of fact, I decided to treat it as a top priority 10 months ago and enter into a special program to introduce Israel into the organization at a peak time," Steinitz told Israel Radio. "It is the most respectable international club a small state like Israel can be accepted into," he added. "From what we know about other states, in the years following the acceptance there is a rise of billions of dollars in foreign investments in the state accepted." Steinitz said Israel was being accepted into the club responsible for dictating the world's financial guidelines. "There is also a political gain here. We are receiving a stamp of approval… that Israel belongs to the world's most advanced and developed countries, and not just financially – in civil rights, a clean and independent court system, regulations, equality, and steps to eliminate discrimination," he said.  Manufacturers Association President Shraga Brosh issued a pleased response saying that "Israel's membership with the organization constitutes a label of quality." Treasury chief Haim Shani said, "The joining of Israel to the organization points to the trust companies have in Israel's economy and solidity. I believe the new membership will help Israel's society and economy progress, attract foreign investors, and develop the market."
Israel: start-up notions
Start-up notionsThe real roots of Israel's economic miracle The 1990s were a revolutionary time Israel's economic development. The government created Yozma, the innovative venture capital vehicle structured by the Israeli government, saw an inrush of venture capital, a wave of NASDAQ IPOs, and benefited from a surge in corporate technology acquisitions. Recent accounts represent the period as a case study for governments looking to foster entrepreneurship. But that story is so incomplete as to mislead policy makers. In fact, developments in the 1990s were the fruits of a process almost forty years old.The real timeline:1.    1950s. The seeds of Israel’s entrepreneurial revolution were sown in the late 1940s and 1950s. Israel’s first (Weizmann) and fourth (Katzir) presidents were scientists. Both believed strongly in the role of science in national defense and societal prosperity; in and of itself unique in the world and a strong message about national priorities. The first military technology transfers took place then, half a century before Mirabilis created ICQ, the first instant messaging system.2.    1960s. R&D got a huge boost in the 1960s, in part from the sudden 1967 French weapons embargo: military self-reliance became defense policy, leading to massive investments in military R&D and the seeding of what would become an entrepreneurial hothouse, the Intelligence Signal Corp (Unit 8200). In 1968 the Katchalski Committee recommended the establishment of the Office of the Chief Scientist (OCS) to help fix market failures in commercializing R&D.3.    1970s. The early 1970s saw Israel’s first NASDAQ IPO (1972; by medical imaging pioneer, Elscint), the embryonic involvement of top-tier US-based venture capital, and very significantly, the establishment in Israel in 1974 of Intel’s first international R&D center. In 1977 the influential BIRD foundation was created to fund technology-based product development between Israeli and US companies.4.    1980s. By the early 1980s there were numerous top-tier VC investments, and by 1984 the NASDAQ value of the first wave of a dozen Israeli tech ventures was $780 million. In 1984 the government passed the milestone Law for the Encouragement of R&D. In 1985 the first limited partnership venture capital fund, Athena Venture Partners, was established with $23 million. In 1987 the cancellation of the Lavi fighter-plane mega-project flooded the market with thousands of engineers who swelled the ranks of startups. By 1989 I even had enough material for my speech in Berlin at the European Venture Capital Association conference, “The History of Israeli’ Technological Entrepreneurship.”You can’t write American history without Jefferson and Washington, yet the authors of Start-Up Nation tried to do the equivalent, overlooking founding fathers like Uzia Galil and Dan Tolkowsky. They’ve even neglected the founding sons—people like Zohar Zisapel (founder of 29 IT firms) and Efi Arazi (founder of Scitex). There are consequences to this revisionism. For example, by focusing on the 90s, policymakers have neglected the parallel entrepreneurship ecosystem that preceded—and enabled—initiatives like Yozma.But it was this ecosystem that, by 1990, made Israel’s entrepreneurial revolution a fait accompli; so much so that by 1997 there had been 68 NASDAQ IPOs—all before Yozma’s investments started bearing fruit.And in truth the massive Russian immigration of scientists and engineers has had little direct impact on Israel’s entrepreneurial revolution—in the 90s most had no choice but to accept K-12 teaching or low-level service jobs; Israel’s vast incubator program, admirably privatized, has bred a relatively low number of successful ventures; and Israel’s culture and institutions were anti-entrepreneurial until the mid-1990s, with labor and the government owning huge portions of the economy, wealth being scorned, and marginal tax rates discouraging extra work.Israel’s entrepreneurial accomplishments have indeed been nothing short of miraculous. Since 1972, over 160 Israeli ventures have been listed on NASDAQ, more than any other country outside of the U.S. and Canada, and hundreds of tech ventures have been acquired. Tens, if not hundreds, of billions of dollars of value have been created. The world benefits from Israeli innovations, such as the USB memory stick, instant messaging and new generation cardiac stents, to name a few. The entrepreneurs who created such novel products have disproportionately contributed to Israel’s growth. So it is only natural for policy makers around the world to want to learn from Israel’s remarkable experience. But they will only reach the right conclusions if they first get the history right. 
Division of Organic and Inorganic Chemistry
The major research activities in the division are focused on molecular design, preparation and studies of novel organic, inorganic and biological materials. The chemical, physical and biological properties of these compounds and materials are investigated comprehensively by diverse traditional and modern sophisticated techniques. Undoubtedly, the molecular engineering of the materials and processes for their synthesis and studies represent a fascinating challenge whose successful solutions require a combination of synthetic expertise, mechanistic understanding, theoretical computational insight and chemical intuition.The major core of the Division is represented by the research groups oriented around synthetic organic, organometallic and catalytic chemistry. Compared with other Israeli universities, the Technion currently accommodates the highest concentration of scientists engaged in these research fields. Overall efforts in the development of new methods and catalysts for organic synthesis are aimed at application to the smarter, more powerful and effective preparation of the materials we depend upon, and the generation of valuable new products of potential interest for chemistry, biology and materials science. At least five groups are dealing with these aspects. Prof. Marek’s group is dealing with the design and development of new and efficient stereo- and enantioselective strategies for the synthesis of important complex molecular structures, with special emphasis on the creation of multiple stereo centers in a single-pot operation. Dr. Szpilman’s group is focusing on the development of novel efficient organ catalysts for useful enantioselective transformations and on natural product synthesis. Prof. Eisen’s group is developing new actinide and group 4-containing organometallic catalysts for the efficient production of useful polymers, including the synthesis of novel membranes as trapping entities for water purification and urea trapping under human physiological conditions (organic materials-oriented projects). Prof. Gross’ group is developing corrole-based catalysts for small molecule activation, oxidation and asymmetric synthetic processes. Prof. Gandelman’s group is promoting the design and development of unique organic and metal organic-based systems, new types of paradigms, and chemical bonding as a fundamental basis for the discovery of novel efficient catalytic processes.Synthesis, characterization and studies on organosilicon compounds with fundamentally and practically unique properties are being developed in Prof. Apeloig’s group. Preparation of novel aromatic compounds and fundamental aspects of aromaticity are being studied in Prof. Stanger’s group. Both groups apply high-level computational chemistry to investigate the related problems theoretically.Supramolecular chemistry is mainly represented by two groups. Prof. Keinan’s group is designing and developing biomolecular computing devices, synthetic capsids and enzymes, molecular machines, catalytic antibodies, along with sensors for explosives. Prof. Eichen’s group is directing self-assembly processes for the fabrication of nanometer-scale electronic components. Optical and electrical properties of organic functional materials are studied intensively in his group.Biologically-related chemistry (bioorganic and bioinorganic) is represented mainly by three groups. Prof. Baasov’s group is engaging in the rational design of novel antibacterial drugs, synthesis and evaluation of catalytic oligosaccharides, and the development of new chemical and enzymatic methodologies for the assembly of oligosaccharides. Prof. Gross’ group is dealing with biomimetic investigations of metal catalyzed processes to develop new strategies for combating cancer and diseases initiated by reactive oxygen species. Dr. Maayan’s group plans to study the interactions between organic biomimetic foldamers (peptide mimics) and inorganic species, such as metal ions, metal nanoparticles and metal clusters, directing these materials towards applications in catalysis and materials science.A more detailed description of the research areas of each group can be found by following the links below:The research areas of each group are described below:1. Apeloig Yitzhak2. Baasov Timor3. Eichen Yoav4. Eisen Moris S.5. Gandelman Mark6. Gross Zeev7. Keinan Ehud8. Marek Ilan9. Mayan Galia 10. Stanger Amnon11. Szpilman Alex M.
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