ספרד מטילה מס על העשירים במדינה: יגייס 1.08 מיליארד יורו
When shrinking asset values are factored in, foreign investment increased, estimate analysts
The claim that foreign investors are fleeing Israel is inaccurate, says Business Data Israel.
The research company has calculated that from year-end 2001 to year-end 2002, foreign investment in Israel shrank by only 10.6%, from $60.2 billion to $53.8 billion.
Superficial analysis indicates that foreign investors are evincing crumbling faith in the Israeli economy. But a deeper probe of the data shows that the main reason for the drop is the shrinking value of assets, not a decline in capital movements, BDI says.
The analysts also say that if falling asset values are discounted, foreign investment in Israel increased in the last year.
From year-end 2001 to September 2002, capital movements by foreigners increased by about $2 billion, indicating that despite the recession and the grim forecasts, foreign investors are continuing to target Israel, BDI says.
In September 2002, total direct foreign investment in Israel (mainly in companies, and in other long-term investments) ¿ which is indicative of investors' confidence in Israel's long-term economic prospects ¿ reached $22.6 billion.
If share price drops and exchange rate differences are discounted, say BDI's economists, then the total for September 2002 rises to $25.8 billion ¿ compared with $23.2 billion at year-end 2001, an increase of almost 11%.
The analysts also looked at short-term investments in Israeli stocks. They found that foreign holdings in negotiable Israeli securities in September 2002 reached $31.2 billion, compared with $37 billion at the end of 2001, a drop of 15.7%. But, BDI notes, almost all the discrepancy is due to the falling value of the shares.
If that decline is neutralized, then total foreign investment in Israeli securities would be $38.8 billion, meaning an increase of 4.9%. In fact, despite the steep drop in stock prices, foreign investors invested another billion dollars, net, in the Israeli stock market over the last year.
Back at the ranch
BDI then turned its attention to holdings by Israeli investors, to examine the faith the locals have in their own economy.
In September 2002, total investment overseas by Israelis reached $19.2 billion, compared with $17.7 billion at the end of 2001, an increase of 8.5%.
BDI's analysis concludes that most of the increase, about $2 billion, is in negotiables. The explanation may lie in growing fears of new tax on stock market gains, and/or uncertainty over the government's economic policies after the elections (this week).
The upshot is that while Israelis increased their investing outside Israel, mainly in negotiable securities, foreign investors elected to increase their investment in Israel.