Lloyd,
The Hebron Redeployment can only have a positive effect from an international perspective. As controversial as this issue is within Israel, the rest of the world has applauded this as a step closer to peace with the PLO. (I'll reserve my own opinions on this subject.) In other words, your stocks will probably do very well in the foreseeable future, and foreign investment in Israel should increase as well.
The Central Bank did, in fact, begin to lower interest rates last year, though not much. The issue is still under consideration at the government level. As for encouraging Israelis to invest in securities, this is a rather complex issue. First, it's a matter of education -- i.e. Israelis are not yet as disposed to play the stock market as Americans are; besides, most don't have the money to risk on such investments, so I expect it'll take some time. I don't know if you're aware of this, but, as it is, Israel does not charge a capital gains tax for earnings on TASE (the previous Finance Minister tried to impose them, but the law was reversed almost immediately). At any rate, if you want to learn more about the efforts being made in this area by the govt., read the Brodet Report -- you can find it at the Ministry of Finance web site (www.mof.gov.il).
I assume that your comment re "reforming the large beaurocracy" refers to the privatization process. If so, rest assured that this is an utmost priority for the present government. Much has already been done towards this end, and efforts are still being made daily to transfer govt. holdings to private ownership. This too will take time.
If you want to invest in stocks listed on TASE, you can do so through any of the Israeli banks in the U.S. Personally, I'd recommend using either Bank Hapoalim or Israel Discount Bank -- the rest are poorly managed both in Israel and internationally. For information, go to their web sites:
www.bankhapoalim.co.il -- click on "International Private Banking"
www.israel-discount-bank.co.il
Whether you should take this route or stick with those stocks traded in the U.S. must be your decision. Pick a few stocks and follow their performance for a while. Some are very good -- e.g. Clal, IDB Holding and Super Sal -- but, if I were you, I'd try to learn the subject inside-out before making a move. Moreover, I don't know what ramifications this would have for you in terms of exchange rates, interest rates and U.S. capital gains tax (I'm a dual citizen, so all my financial activities in Israel are treated accordingly).
Best regards,
Timna |
