Among all the stock markets in developed countries, guess which one produced the highest risk-adjusted returns in the last ten years? The Tel Aviv Stock Exchange. Granted, in 2011 the TASE yielded lower returns than Wall Street and European markets, but the last decade shows a different picture.
According to the Bloomberg riskless return ranking, the Tel Aviv TA-25 Index returned 7.6% in the ten years ending yesterday, after adjusting for volatility, the highest among 24 developed-nation benchmark indexes. The second-best market, with a risk-adjusted gain of 6.7%, was Hong Kong’s Hang Seng Index (HSI). Israel outperformed as it fought the Second Lebanon War against Hezbollah in 2006, the Cast Lead Operation two years later in Gaza, and is currently confronting Iran’s nuclear program.
"Israel is an exciting place to invest,” former hedge fund manager Michael Steinhardt told Bloomberg. "The country is surrounded by enemies, it’s always on the edge of extinction, but it expands and prospers."
The Bloomberg report also notes that the Israeli gauge returned 161%, including dividends, over the last decade, the third-best performance among developed markets after Norway’s OBX Index and the Hang Seng. While Oslo’s index produced the highest return, its volatility was 35% greater than that of the TA-25. Statoil ASA (STL), the world’s seventh-largest oil exporter, comprises more than 25% of the Norwegian gauge, making the market susceptible to changes in oil prices.
Israel's gross domestic product will grow 3.2% in 2012, according to Ministry of Finance projections. This is almost three times the 1.2% average for the Group of ten countries and faster than the 2.2% expansion in Norway, according to data compiled by Bloomberg.
Published by Globes [online], Israel business news - www.globes-online.com - on February 20, 2012
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