Foreign investors are still selling their investments in Israel in response to the shekel appreciation against the dollar that followed the interest rate hike, the weakening of the dollar on global markets, and the steep stock exchange decline in the US. Bank of Israel figures show foreign investments were down $152 million in June, following a $149 million drop in May.
Most of the decline was due to the withdrawal of $407 million from foreign currency deposits in Israel, following the withdrawal of $188 million in May. The withdrawals were a result of the Bank of Israel's recent cumulative 5.3% interest rate hike.
Direct foreign investments continued to fall in June, amounting to a net of only $65 million, compared with $125 million in May. Direct foreign investments totaled $368 million in the second quarter. Foreign investments in negotiable securities in June were a net $144 million, compared with minus $31 million in May. Total foreign investments in negotiable securities in the second quarter amounted to only $100 million.
Overall foreign investment in the first half of 2002 amounted to only $1.06 billion, an annualized 52% drop, compared with 2001, and down 80%, compared with the record $11.3 billion in 2000.
Direct foreign investments in January-June totaled only $168 million, a drop of 90%, compared with 2001, and of 97%, compared with the record $9.6 billion in 2000.
Foreign residents have sold $79 million worth of shares on the Tel Aviv Stock Exchange since the beginning of the year, and $1.1 billion since the beginning of 1997.
On the other hand, the wave of foreign investments in real estate and residential housing is continuing. These investments totaled a net $47 million in the first half of the year and over $1 billion since the beginning of 1997.
Published by Globes [online] - www.globes.co.il - on July 28, 2002