Investing in Israel
With a Strong Startup Ecosystem, Active VC Industry, & Effective Central Bank, it makes sense Investing in Israel.
Israel went through a lot of challenges over the past couple decades. The country remained resilient and changed with the times to support better living standards and investing in national security.
Finance in Israel is moving away from the monopolized, political, and bank-dominated past. Competition and reliance on capital markets is the new norm. And investors are taking notice...
Investing in Israel an excellent opportunity to:
Participate in Israel's extraordinary growth
Help Israel progress to a scale-up nation
Take advantage of Israel's restructured nation
Develop your investment portfolio based on your (or your foundation’s) values
Israel’s Economic Past, Present, & Future
Israel experienced major shifts over the last few decades. Understanding the financial trends shows why now is a great time to support Israel’s desire to move forward in the economy. It’s an opportunity to support the upward movement from Startup Nation to Scale-Up Nation.
While it would be impossible to cram the complicated recent history of Israel into one article, let’s take a look at some of the key points.
The (Relatively) Distant Past
In the 1960s, Israel began establishing an economic system in hopes to lay the foundation for decades to come. This meant overcoming a lack of resources and creating social organizations to support the market.
The aftermath of the 1973 Yom Kippur War stunted the Israeli economy. Stagnant economic growth and rising inflation caused banks to require additional capital to shore up their balance sheets. By 1983, bank share prices plunged due to heavy selling pressure.
As a result, the Tel-Aviv Stock Exchange (TASE) closed for 18 days. The crisis revealed major structural flaws in the Israeli financial system.
In 1985, an Economic Stabilization Plan was created to curb hyperinflation. This plan included slashing spending, wage/price controls, and ceasing money printing to fund budget deficits.
Inflation rates dropped and the economic crisis receded in the 1990s
Recent Past and Present
In late 2013, the “Law for the Promotion of Competition and Reduction of Concentration” passed. These sweeping reforms opened the economy for consumers and investors by breaking up monopolies and increasing competition. With a deadline in these reforms in 2019, monopolistic empires had to restructure segments of their enterprises.
This left Israeli tycoons selling off large shares in the TASE in November of 2019.
Other reforms, like the 2017 “Law for Increasing Competition and Reducing Concentration in the Israeli Banking Market” ordered the two largest banks to divest their credit card business. The credit card competition should boost consumption spending in Israel.
Slowly deregulating the financial system allows for the Israeli economy to break the chains of a concentrated market. It’s an exciting opportunity to participate in the funding and growth of companies thriving and scaling up with Israel's recent changes.
Photo by Rafael Nir on Unsplash
Looking Forward
What does the future bring for Israel’s economy?
Let’s start with an excellent description of the Israeli mindset coined by Shimon Peres, President of Israel (2007-2014):
“In Israel, a land lacking in natural resources, we learned to appreciate our greatest national advantage: our minds. Through creativity and innovation, we transformed barren deserts into flourishing fields and pioneered new frontiers in science and technology.”
And it’s true…
Israel’s high-tech sector has boomed since the late 1990s. The country’s great universities, large companies, and start-ups created a powerhouse of technology, pharmaceuticals, and telecommunication.
In fact, Israel’s gross domestic product (GDP) per capita--a comprehensive scorecard of a given country’s economic health--was $19,133 in 1999. Twenty years later, the GDP per capita rose to $42,823. That’s an impressive 123% increase. What does that actually mean? GDP increases when a country’s total value of goods and services domestic producers sell abroad exceeds the value of foreign goods and services domestic consumers buy.
Even more appealing, the investment industry in Israel roughly resembles the United States in the 1950s and 60s.
Sure, 2020 brought some setbacks--as with everyone in the global market. Israel has, however, been through many difficult times in recent decades. They laid the foundation for a successful rebound.
Get Started Investing in Israel
You or your foundation have the power to make a difference in Israel.
Ready to start investing in a portfolio of post-IPO stocks to help propel Israel from the start up to scale up nation?
Since 2010, Israel Investment Advisors (IIA) has been the premier way for Americans to invest in Israeli stocks. Based in Denver, Colorado, we translate our knowledge and expertise in the Israeli economy and stock market into long-term growth for our clients.
Our tireless research and monitoring of the Israeli business climate makes us one the very few American companies already investing in profitable Israeli scale-ups.
Contact us now so we can get started discussing how our actively managed Israeli stock portfolio may give your investments focused, long-term growth.