Global Interdependence Center

1
Global Interdependence Center Hebrew University

• Financial Opportunities in Israel
• Professor Dan Galai
• School of Business Administration

2
Israel vis-à-vis USA

• The Israeli macro-economic environment is
  different from the USAs.
• The Israeli financial markets are vastly
  different from the USA financial markets and
  institutions.

3
General View of the Israeli Economy

• Recession during 2000-2003
• Growth of 5 during 2004-2008
• Stable banking system
• Separating investment banking activities from
  commercial banks (The Bachar Committee)
• Enhanced regulation of financial institutios

4
Major Economic Indicators
5
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.

6
The BOI Interest Rate
7
Dynamics of Stock Crisis
2008and 1994
5 Years 1990-4
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8
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??

9
The Case-Shiller Home Price Index
10
The Israeli Real Estate Market

• Was depressed from 1996 to 2004
• Moderate price increases from 2005 especially in
  Central Israel (Tel-Aviv, Jerusalem)
• Limited inventory of new apartments
• Natural demand of 35,000 units and
  25,000-30,000 new units.

11
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.

12
Venture Capital in Israel

• Technological Incubators
• Financing by the Office of the Chief Scientist
  (OCS), the Ministry of Industry
• Angels
• Venture Capital Funds

13
Venture Capital funds

• More than 50 Israeli VCs
• Appr. 500 million were raised in 2008
• 5-10 active American VCs
• Major fields Communication, Software, Internet,
  Life Sciences.

14
Investments in venture capital (billions of )