Tel Aviv one of world's ten cheapest stock markets
"The Tel Aviv Stock Exchange (TASE) is one of the
world's ten cheapest markets. In 2011, in line with the global trend, the
Israeli market fell. But internal and external forces last year resulted in
only a partial correction in Israel, while all other markets enjoyed rising
prices. Distortions tend to be closed, so I believe that we'll ultimately close
the gap," says UBS Wealth Management Israel Ltd. chief investment officer
Kobi Feller.
Feller joined UBS Israel two years ago to set up the
branch's wealth management unit. He says that the decision to establish the
activity was made after UBS AG designated Israel as a
strategic target. "The bank carried out a thorough study, which included
the amount of the public's assets and the accumulation of new wealth. When it
was completed, the bank marked Israel, Brazil, and Mexico as the three markets
with the greatest potential."
Surprisingly, while many sources in the Israeli market
believe that Israel suffers from over-regulation, UBS says that this is an
advantage. "Like other foreign investors, UBS seeks the certainty that
regulation creates. The bank operates according to meticulous standards and
rules, and from this perspective, regulation is an advantage. The more a market
is supervised and controlled, the easier it is for the bank to operate in
it," says Feller.
Feller says that one of the factors which adversely
affected the TASE was Israel's switch from the MSCI emerging markets index to
the developed markets index in late 2010. "Were Israel still included in
the emerging markets index, the TASE would be 10% higher," he says.
"The reclassification as a developed market slowed the rate of rises,
which had been strong until then."
Feller is nonetheless optimistic, and explains why the
TASE is attractive. "It should be remembered that in addition to being
inexpensive, the TASE offers sector diversity. In my opinion, the Tel Aviv 25
Index does not necessarily represent the capital market's performance, because
there is a big difference between it and the Tel Aviv 75 Index and the Mid-Cap
Index. This is because of the composition of the Tel Aviv 25 Index, in which
specific shares affect the whole index. The other shares are still traded
cheaply."
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