Global Interdependence Center & Hebrew University Financial Opportunities in Israel Professor Dan Galai School of Business Administration
Israel visàvis USA The Israeli macroeconomic environment is different from the USA’s. The Israeli financial markets are vastly different from the USA financial markets and institutions.
General View of the Israeli Economy Recession during 20002003 Growth of ~5% during 20042008 Stable banking system Separating investment banking activities from commercial banks (The Bachar Committee) Enhanced regulation of financial institutios
Major Economic Indicators 2000
2001
2002
2003
2004
2005
2006
2007
2008
GDP- GROWTH 10.6% EXPORT- GROWTH 20.5% IMPORT- GROWTH 12.4% INFLATION RATE 0.5%
1.5% -9.7% -3.7% 2.0%
3.5% 9.7% 11.0% 5.4%
1.3% 6.0% -0.6% -2.1%
5.0% 18.5% 16.0% 1.4%
6.0% 9.4% 10.3% 3.0%
7.2% 8.4% 6.7% 0.2%
5.1% 4.5% 9.6% 3.5%
8.0% 2.7% 3.0% 4.4%
Financial markets in Israel 40% decline in TA25 stock index 20% decline in rated bond prices Substantial decline in real estate stocks and bonds. Low yields on government bonds.
The BOI Interest Rate הריבית במשק בשנה האחרונה
4.5 4.25 4 3.75 3.5 3.25 N D J F M Apr- M ov- ec- anJ Jul- A eb- ar- 08 S Oct07 07 08 ay- un- 08 N 08 08 ug- ep- 08 08 08 ov08 08 08
Dynamics of Stock Crisis 2008and 1994 ??תחזית לשנים הבאות??
Years 1990-4 5
מדד המעו"ף 5 -שנים אחרונות
The USA Real Estate Market Sustained growth from 1991 Too low interest rates after Oct. 2000 Real estate bubble up to 2006 Price declines of ~20% so far How much more??
The CaseShiller Home Price Index
The Israeli Real Estate Market Was depressed from 1996 to 2004 Moderate price increases from 2005 especially in Central Israel (TelAviv, Jerusalem) Limited inventory of new apartments “Natural demand” of ~35,000 units and 25,00030,000 new units.
Venture Capital in Israel Technological companies account for ~40% of Israeli export. Major contribution to GDP. More than 100 technological companies are listed on the NASDAQ. ~20 more on European exchanges. Teva is now among the 10 largest companies on the NASDAQ.
Venture Capital in Israel Technological Incubators Financing by the Office of the Chief Scientist (OCS), the Ministry of Industry Angels Venture Capital Funds
Venture Capital funds More than 50 Israeli VCs Appr. $500 million were raised in 2008 510 active American VCs Major fields: Communication, Software, Internet, Life Sciences.
Investments in venture capital $( (billions of Q1Q2 2007
Q1Q3 2008
Investment
1.2
1.4
Exits
2.7
1.0
Investment
22.5
21.6
Exits
34.6
21.0
ISRAEL
USA