Foreign investment in Israel plunges 56% in first half By Tal Muscal

July 23, 18:40 -- Total foreign investment in Israel plunged 56 percent to $2.54 billion in the first half of 2001, compared to $5.82b. during the corresponding period last year, the Bank of Israel reported today.

Economists noted that despite the fact that the security situation has deteriorated much since the beginning of the Intifada in September, the main reason for the decline in foreign investments is linked to Nasdaq's slump as investors reduced their hi-tech investments.

"This drop has nothing to do with the security situation, rather the downturn of the Nasdaq Composite Index," said Victor Shohet, an economist at Deutche Bank's office in Tel Aviv. "The burst of the Nasdaq bubble has led to the decline."

The figures were released only one day after the central bank noted an acceleration of economic slowdown between April and June, the same months when a 25% drop in foreign investments was recorded. According to the figures, second quarter overseas investments totaled $1.08b, some $400 million less than in the first quarter.

The sharp decline was mainly due to a 26% fall in direct foreign investments - characterized as an acquisition of at least 5% of a firm - which fell to $1.66b., and a 75% plunge in securities investments, which totaled a low $885m. during the first half of the year. The figures are substantially lower then the $3.58b. foreign investment recorded in the corresponding period a year ago and the $5.03b. invested by overseas residents in the second half.

The slump of the global hi-tech sector has led to a sharp decline in the money raised by Israeli companies through public offerings and debt issues abroad. According to the central bank, Israeli companies raised $892m. abroad, mainly on Nasdaq, during the first six months of the year compared with $2.87b. a year earlier, representing a 70% drop.

Even more dramatic was the decline of foreign investments in the Tel Aviv Stock Exchange (TASE). During the first six months of this year, nearly half a billion dollars was withdrawn from the TASE, compared to 86m. in the same period last year. Foreign investors withdraw some NIS 929m. in direct investments in TASE traded companies compared to investments of $11m. during the same period last year.

http://www.jpost.com/Editions/2001/07/23/Digital/Digital.31033.html

-- Martin Thompson (mthom1927@aol.com), July 23, 2001

Answers

This whole NASDAQ, hi-tech slump is sure a mystery. Only today on C-NBC some analyst who follows insider trading was saying that insider buying of their own stock has increased dramatically recently. What do the insiders know that we don't? Hmmm!

-- Uncle Fred (dogboy45@bigfoot.com), July 24, 2001.