Beyond the obvious help from healthcare mergers and acquisitions, there are reasons for optimism with Israeli stocks and the country’s broader economy.
“Even though the Israeli economy capitulated to deflationary pressures five months ago, the Israeli economy is forecast to grow 3.4 percent this year, strengthening to 3.7 percent in 2016, assuming its territory abutting any of its neighbors (like Palestinian-controlled Gaza and the West Bank) does not fall prey to another round of terrorist attacks. Anticipated modest declines in joblessness in 2015 and 2016 should reinforce the improving pattern in private consumption arising from elevated real disposable personal income as a result of expected additional tax reductions and declining living costs. Exports too are likely to contribute to a pickup in economic activity thanks to the shekel’s steep, nine-month depreciation against the US dollar. Consequently, the current account surplus as a proportion of nominal GDP will steady at three percent this year before swelling to 3.5 percent in 2016,” according to S&P Capital IQ.
In shekel terms, Tel Aviv stocks trade at less than 12 times earnings, according to S&P Capital IQ. The multiple on ISRA is higher at closer to 15, which is understandable given the ETF’s 33.5% to Israel’s vibrant technology sector.
Market Vectors Israel ETF
