"Following Israel's reclassification to the MSCI developed market status, we can expect to see a sharp drop in trading volumes. We've moved to other indices and our weight in them is just 0.3% of the MSCI World Index and two other developed market indices," said Merrill Lynch analyst Haim Israel at a conference of the CFO Forum in Eilat today.
Haim Israel added, "Although this is a high weight, it's lower than Israel's weight in the emerging market indices. 89% of the huge trading volume we saw was in just five big stocks, especially Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA). All the rest interested no one."
Haim Israel said, "We in the midst of a huge diplomatic crisis, and investors are saying to themselves, 'Not now'. We don’t have the time to even begin talking about the economy of a country that constitutes 0.3% of an index. The crisis is further delaying foreign investors' interest in Israel.
"Foreign players who accounted for a quarter to a third of trading on the TASE have left, and new foreign players have not yet shown any real interest in it, which will affect trading volumes on the TASE. Since the beginning of the year, Israel was underweight for foreign investors, in contrast to Russia, South Africa, Turkey, and other outperforming countries among foreign investors. The ratio at Merrill Lynch is now 1:18; with one share bought for every 18 sold. In other words, investment is leaving Israel. This ratio is double the ratio at the height of the high-tech crisis a decade ago."
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2010
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