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Technology Stocks : VocalTec (VOCL) -- Ignore unavailable to you. Want to Upgrade?

To: STK1 who wrote (1625)	7/3/1998 5:33:00 PM
From: Don Walster	Read Replies (1) \| Respond to of 2349

Hi Charles! It seems to me that today's editorial from Globes about the Israeli economy could have a strong positive significance not only for VocalTec but also for Israeli high tech stocks in general. This came from a reliable source that was not promoting the sale of any individual stocks. These comments appear to be based on sound economic data. If this prediction is true, it could have enormous positive consequences for VocalTec and other Israeli high tech stocks. Kindest regards, Don Thursday , Jul 2, 1998 Sun-Thu at 18:00 (GMT+3) Portfolio Guide Sigma: Public About to Jump Back In By Amir Eisenberg Sigma PCM Capital Markets of the Sigma group is one of Israel's leading investment management firms. The company, which engages in the management of security portfolios and mutual funds, was founded in 1992 by Prof. Dan Galai and Adv. Rivka Perry, joint general managers in the company. Galai, a professor of finance and banking at the Hebrew University, Jerusalem, specialises in derivatives and risk management. The company has a partnership with American-Israel bank in SBA, which engages in investment portfolio management for the bank's customers. Sigma employs advanced computerised decision support systems of its own development in handling securities. These systems facilitate the rapid processing of large quantities of information and assist in analysing the value of securities and spotting arbitrage opportunities. The company also specialises in financial instruments and derivatives. In Sigma's assessment, the stock market can be expected to prove the most attractive investment instrument in the coming year. Eyal Kolka, in charge of portfolio management, cites the following reasons: Economic and capital market cyclicity: Sigma assesses that within a year, the Israeli economy be past the lowest point of its recession and will gradually start to shift to a growth track. The capital market, which is usually ahead of real economic developments, has started to show signs of a positive trend taking root, due to economic expectations. Decline in inflation environment: in recent months there has been a sharp decline in Israel's inflation environment. Inflation expectations, deriving from shekel and linked debenture yields, stand at less than 3.5% for the coming year. The expected inflation rate for the next four months is in the vicinity of zero. The decrease in the shekel interest rate. The sharp, and rapid decrease in the inflation environment has resulted in six successive interest rate reductions, amounting to 2.1% since the beginning of the year. But the rate of interest rate reduction has not kept pace with the decrease in inflation expectations, leaving the shekel interest on Bank of Israel sources at a real level of 8%. The interest rate is expected to continue to be reduced, in small doses, over the coming months, due to the low inflation environment and the economic slowdown. Sigma expects a further aggregate interest rate reduction of 1.5% to 2% by the end of the year. Yield on debentures: the high real interest rate dictated by Bank of Israel has percolated down to index linked bonds. Yields on short term debentures are close to 7%, and on long term debentures stand at 5.3%-5.4%. These yields on long-term debentures are something of a record in the past decade, being even higher than at the height of the provident funds crisis in 1996. The decrease in the shekel interest rate in the next few months should cause linked debenture yields to fall all along the curve, producing significant capital gains for those investing in long-term debentures. Change in public tastes: today, most of the public's money is invested in the "shekel mountain", plus a portion in linked savings schemes. The decrease of the shekel interest rate and bond yields will result in a situation in which the interest offered to the public in those two instruments will significantly decrease, and the shekel stronghold will be deserted in favour of other investment instruments, mainly the stock market. Structural economic reform: structural reforms recently overtaking the economy have included privatisation moves, take-overs and possible mergers. These structural changes, in which the capital market plays a key role, are boosting interest in the market, promoting trading volumes and attracting more investors. Stock market price levels: a review of key indicators of market price levels, as also the ratio of market value to shareholders' equity and the profit multiple, reflects a market that is considerably cheaper than stock markets in the United States and Europe, and by historical comparison to those same indicators in Israel in the past. There is also the fact that current corporate profitability mirrors the Israeli economic slowdown, and the stock market will become all the more attractive as the recession is left behind. Foreign investments: Foreign investors are seen to be hard pedalling their financial and real investments in Israeli companies. This process is fuelled by positive foreign investor analyses of the processes at work in the Israeli economy and its price levels. This trend is expected not only to continue but to shift into higher gear, inter alia due to the privatisation process, and may help close the gaps between share price levels on the Israeli market and on other markets.