bluestar israel equity update · much of the analysis in our autumn 2011 essay on the effect of...
TRANSCRIPT
“Feeling Good but Not Much to Show Yet” May 6, 2013
BlueStar Israel Equity Update May 2013
Despite the fact that April saw the BlueStar Israel Global Index’s (“BIGI”) first monthly decline of 2013, it was generally a “feel-
good month” for Israeli equities and Israel’s economy. In April, BIGI lost 0.63% while major global equity indexes rose. We
continue to be quite bullish on Israeli Global Equities in the long term and believe there is upside potential in the short to
medium term as well.
The greatest contributor to this “feel-good” month was the performance of the New Israeli Shekel (“NIS”), especially as
compared to many of the world’s leading currencies. Israel’s currency was the strongest developed market currency in the first
quarter of 2013. As we have discussed for over a year now, the key factors contributing to the stability and strength of the NIS
are Israel’s prudent fiscal and monetary policy, and the expectation that Israel’s domestic energy will have a future positive
impact on its Balance of Payments. Much of the analysis in our autumn 2011 essay on the effect of Israel’s natural gas industry
on the rest of the economy and region-- “The Economics and Politics of Israel’s Offshore Energy Discoveries”-- remains valid, and
we encourage readers to revisit that article by clicking on the link above.
BIGI (BlueStar Israel Global Index) Performance Versus the TA-100 and S&P 500 Indices Since 2010
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These are not recommendations to buy or sell any security © 2013 BlueStar Global Investors, LLC
Shekel strength is a vote of confidence in Israel’s financial stability -- thus a certain degree of risk has been or will be removed
from Israel’s capital markets and equity valuations via lower discount rates. Indeed, we see global investors realizing the benefit
of holding assets (traditional financial instruments or alternatives) denominated in Shekels. Though we cannot expect the NIS to
strengthen forever, its performance versus the dollar--especially as the dollar strengthened versus other global currencies—
should be comforting for those who are averse to Israel’s unique risk factors.
Other positive developments in April and early May include the following: more clarity on how Israel’s political
leaders will handle its budget deficit problem, with the new Finance Minister finalizing a fiscally-responsible budget;
positive economic indicators, including cues from the labor market; and a brightening picture for other Developed,
and Emerging Market equities. Lastly, we see positive signaling from some of the lesser-known Israeli Global Equities
in continuing to build the case for a turnaround for technology stocks in the second half of 2013.
This monthly column produced by BlueStar Global Investors discusses Israeli equities traded worldwide. The relevant benchmark for our review is the BlueStar Israel Global Index (“BIGI” BLS:IND on Bloomberg), which we believe represents the complete opportunity set of Israeli equity investments. Israel has one of the most resilient economies in the world and its technology sector plays an integral part in the global technological revolution. Yet few are aware of the global footprint of Israel’s companies in other sectors, and fewer still know how to make their knowledge of the Israeli economy actionable. This column helps investors gain insight into the macro forces (including the geopolitical environment under which Israel’s economy operates) and the individual company investment opportunities that have contributed to global Israeli equities’ outperformance of U.S. equities by nearly 2000% over the past two decades.
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One of the most troubling recent developments for Israeli Global Equities has been the worsening civil war in Syria
which is drawing in Hezbollah fighters and Iranian arms shipments. In response, Israel’s military has stepped up its
pace of defensive activity in the north of the country, as well as across the Lebanese and Syrian borders. As this report
has stated often, we hesitate to allow such developments to weigh on our investment decisions until actual military
conflict on the ground in Israel is imminent. For those seeking exposure to Israeli equities, we believe that the
omnipresent geopolitical risks in Israel make choosing a portfolio of Israeli Global Equities prudent. The biggest risk
factors, though, remain the same as last month: further deterioration in the European economies and Israel’s
government budget deficit. The assessment of risks to Israel’s economy will change if the Syrian conflict spills over
onto the ground in Israel. But, so long as the IDF can keep the conflict on Syrian (or Lebanese) territory, the
geopolitical risks for investing in Israel are secondary.
BIGI April 2013 Performance and Greatest Gainers and Losers
Israeli Global Equities--as measured by BIGI--underperformed other developed and emerging market equities but
outperformed other Israeli equity benchmarks in April 2013. As we stated last month: “The past nine months or so have
witnessed the greatest performance differential between Israeli Global Equities and other equity benchmarks, especially
the S&P 500, in several years. This played out against a backdrop of better-than-OECD-average GDP growth and one of
the most stable banking sectors in the world. Thus, we attribute last year’s underperformance to overblown fears of
geopolitical tumult. As we have seen repeatedly over the past 35 years, when fear-based selling of Israeli Global Equities
subsides, long-term investors are rewarded with strong outperformance.”
Source: BlueStar Global Investors LLC
Source: BlueStar Global Investors LLC; Sectors determined by FTSE Currency-Adjusted returns in dollar terms
Benchmark April 2013 Performance
BIGI -0.63%
TA-100 -1.55%
MSCI Israel -1.37%
S&P 500 1.81%
MSCI EAFE 5.02%
MSCI EM 1.22%
Top-Performing Israeli Stocks April 2013 Worst-Performing Israeli Stocks April 2013
PROLOR BIOTECH INC 23.32% RADWARE LTD -60.27%
Babylon Ltd. 19.26% ISRAEL CORP LIMITED/THE -15.09%
magicJack VocalTec Ltd 18.07% Alon USA Energy -12.86%
SHUFERSAL LTD 18.06% SYNERON MEDICAL LTD -12.62%
Jerusalem Oil Exploration 16.31% CERAGON NETWORKS LTD -11.81%
CELLCOM ISRAEL LTD 15.83% Caesar Stone Sdot Yam Ltd -11.14%
NITSBA HOLDINGS (1995) LTD 14.66% CLICKSOFTWARE TECHNOLOGIES -10.45%
AIRPORT CITY LTD 14.19% VERINT SYSTEMS INC -9.60%
RAMI LEVI CHAIN STORES HASHI 14.16% Delek US Holdings -8.54%
DELEK AUTOMOTIVE SYSTEMS LTD 12.91% MELLANOX TECHNOLOGIES LTD -8.16%
Israeli Sector and Equity Performance
The best performing stock in BIGI during April was Prolor Biotech
(PBTH:NASDAQ). In early April, Prolor announced that it was in talks to
commercialize its therapeutic protein products but was not in talks to sell the
company. A week later, it was announced that Opko Health would acquire Prolor
Biotech for $480 million, a 30% premium over the company’s market value at the
time of the announcement. Babylon Ltd. (BBYL:TASE), which provides online
translation services, rose by 19.26% in April on a favorable deal with Yahoo,
relatively cheap stock valuation, and the possibility that the company will list is
shares on a New York Exchange in the near future.
Developments in Israel’s Telecommunications sector, which continued its
recovery in April with a gain of 0.18%, supported the stock prices of Israel’s three
largest telecommunications service providers: Bezeq (BEZQ:TASE), Cellcom
(CEL:TASE,NYSE), and Partner (PTNR:TASE,NASDAQ). Some see the cell phone
market in Israel as stabilizing after over a year of declining stock prices for Bezeq,
Cellcom, and Partner. Israel’s cell phone market was dominated by the big three
service providers before the Ministry of Communications opened the Israeli
market to competition. Now, new entrants are ratcheting down their
competitive pricing schemes and the big three companies have downsized their
operations to allow for earnings growth and product innovation going forward.
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CaesarStone (CSTE: NASDAQ) was a loser in April as Tene, a leading private equity firm, sold most of its shares in the company
on the open market. Though we don’t know the specifics of why Tene chose to sell its stake in the company, we believe that the
lowered share price could be a temporary price dislocation. It is also possible that the firm is exiting because it believes the
company’s stock is overvalued or that the life of the fund is nearing completion and the firm is cashing out after an extremely
successful IPO. For the time being, we stick to the view that April’s decline was caused by structural market forces and that it
doesn’t signal a change in the underlying business or dilution of shares (were are cautiously bullish on CaesarStone shares and
looking for higher earnings to justify the stock’s trading multiple).
There were some notable positive and negative contributors to the 0.53% decline of the Technology sector in April. Radware
(RDWR:NASDAQ) lost 60% of its market value almost overnight on concern that the company would post its slowest annual sales
growth in seven years in 2013. Mellanox (MLNX:TASE,NASDAQ) continued its slide, which began last August, with an 8.16%
decline in April. It lowered its second quarter revenue guidance and stated that it was experiencing weak demand for its
products by large customers like Hewlett Packard and IBM.
On the other hand, some companies showed or are beginning to show notable turnarounds. First, DSP group (DSPG:NASDAQ),
which was not a top-ten BIGI performer in April, saw its stock price rise by 25% between April 22 and May 6. The company is the
leading provider of chipsets for cordless phones, a market which has been in a steady decline since the advent of the cell phone.
The company’s stock trades at decent levels relative to cash, revenues, and book value, yet most analysts dropped coverage of
the stock as its primary industry was in a secular decline. Since then, the company made what we believe to be an important
strategic acquisition of another Israeli company, BoneTone, which provides proprietary voice-recognition technology The
company is also seeking to become a major player in home automation and gateways, as well as VoIP and unified
communications in the home and enterprise markets. The company’s management, in discussing its Q1 2013 results, reported
that it “exceeded guidance in almost every financial metric…return to GAAP operating profitability is a powerful demonstration
of our successful turnaround, especially in light of the uncertain market dynamics.”
Sector (As Defined by FTSE)
April 2013
Financials 0.27%
Telecommunications 0.18%
Consumer Services 0.16%
Health Care 0.11%
Consumer Goods 0.10%
Industrials 0.01%
Utilities 0.00%
Oil & Gas -0.31%
Technology -0.53%
Basic Materials -0.61%
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Second, Orbotech (ORBK:NASDAQ), which was also not a top-ten BIGI performer in April, beat both revenue and earnings
forecasts in its Q1 2013 earnings release. We believe that Orbotech’s stock appreciation may be signaling a turnaround in
consumer and other technology stocks. The company designs, develops, manufactures and services automated optical
inspection systems. Its imaging and computer-aided manufacturing and engineering technologies enable electronics
manufacturers (printed circuit board and flat panel display manufacturers) to achieve increased yields and throughput. The
positive signs from companies like Orbotech (and other larger and well-known technology giants like Intel and Miscrosoft)
combined with suppressed technology stock prices during the broader market rally over the last year or so could enable the
technology sector to become amongst the equity market leaders in the second half of 2013--barring systemic macroeconomic
shocks to the recovery of the global economy.
A leading story in the news of Israeli Global Equities has been about a potential takeover of Israel Corp.’s (ILCO:TASE) Israel
Chemicals (ICL:TASE) by Canada’s Potash. Israel Chemicals reported lower revenues during Q4 and full year 2012 and, in late
March, discussion of a sale of Israel Chemicals to Potash ceased, sending shares of Israel Chemicals and its parent company, Israel
Corp., sharply lower in April. We believe that the sell-off in Israel Chemicals shares could be a good opportunity to buy a high-
yielding, shekel-denominated equity, whose outlook was good enough for another chemical giant to warrant at least exploring a
takeover. Also in April, UBS stated that it saw a 60% upside in shares of Israel Corp. (one of the largest holding companies in
Israel), asserting that the market did not appreciate the potential of IC power and Qoros Auto and chose to focus too much on
Better Place and Zim.
Not much has changed for the long-term outlook for the Oil & Gas sector since last month, when we stated: “The Oil & Gas sector continues to be a leader within Global Israeli Equities. This industry is still in its infancy but is maturing quickly. The first deliveries of natural gas from the Tamar reservoir arrived in Israel as of the first of April. For several quarters we have promoted an overweight in the Oil & Gas sector, especially beginning in December 2012, when GDP projections for 2013 began to emerge. Projections for Israel’s 3.8% growth were said to sound better than they actually are because one-third of that growth would come from the Oil & Gas sector. At that time, we stated the following: “From an equity investment perspective, one way to proceed would be to continue overweighting the energy sector. Growth in this industry may not immediately lead to a multiplier effect through the broader economy. Instead of a portion of revenues flowing into the pockets of would-be employees and the government through taxes, a portion of revenues will flow into companies’ balance sheets or will be spent by them to invest in growth-yielding projects. For this reason, holding an overweight position in Israeli energy equities and LP’s will aid in insulating investors from lower-than-expected economic growth in Israel [outside the oil & gas sector].” Additionally, though this sector currently holds a small weight in the BlueStar Israel Global Index, the weight will likely grow over the years and decades to come; overweighting smaller growth sectors, we believe, is a prudent long term investment strategy. It is certainly not expected that this group of stocks will rise in a straight line. There will be times when the group is over-valued or when certain risks are not discounted fully, but we are viewing this sector as a buy-and-hold long term investment.
Oil & Gas sector highlights in April include: • Shell is considering selling its 23% stake in Woodside, fearing an Arab boycott • Noble Energy raised the Tamar field’s gas estimates to 10 TCF; Tamar’s five subsea wells are now producing 300
million cubic feet of gas per day • Companies began bidding for licenses to explore for Lebanese gas • Cyprus’ industry minister said that linking the Tamar field to Cyprus was the best way to export Israeli gas; the
country wants to sign a letter of intent with Delek Group for the construction of a multi-billion dollar LNG facility • No significant gas at the Aphrodite 2 well in the Ishai license • Israel Opportunity allowed to acquire the Pelagic, Gal, and Neta licenses; Neta and Roy licenses granted: 70% to
Ratio, 10% to Israel Opportunity, 20% to Italy’s Edison • The price of gasoline fell, again, in April
Israeli Sector and Equity Performance
After breaking important trend lines in November (during Israeli Global Equities’ rebound from the sharp drop at
the beginning of Operation Pillar of Defense), the BlueStar Israel Global Index (BIGI) consolidated in December and
resumed its upward movement in January and February. The market selloff during Operation Pillar of Defense to
the 200 index level for BIGI confirmed that this is a significant medium and long term level of support for the
index. On the three-year chart below we see that BIGI is now consolidating, within a trading range, following the
rebound from mid-2012 just described. The range is depicted by the dotted green and red lines and for now, the
range is occurring within the context of an upward trend. We see a greater probability of the index breaking
above the upper end of this range in a meaningful way than breaking down below the lower end of this range. If
this occurs, we see the index rallying strongly to the 250-260 level and then consolidating before a move higher to
perhaps 275 or 300 by the end of the year.
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Source: BlueStar Global Investors LLC (Jan 1 2010- April 30 2013)
At this point, we are comfortable saying that 229-230 has been confirmed as support at the lower end of the
above-described range. This area will become an even more significant support level if it is tested and holds for a
third time. If the lower end of the range is broken we would look for the lower band of the upward channel, just
above the 220 level, to be the first level of support and a soft stop- loss level, followed by the 200 level being our
hard “stop-loss” level.
Market Trends- Technical Analysis
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Risk management parameters for those with a shorter time horizon have changed slightly since March and should
include a “soft” stop-loss activated with a daily close below the lower band of the consolidation zone on the three-
year chart at around 229 and “hard” stop-losses with weekly closes below 220 and 200. For the longer-term
investor, if these levels are breached and then confirmed with a weekly close of BIGI below 195, the longer-term
outlook will shift dramatically, and any rallies should be sold. A breach of 195 would increase the likelihood that
the spring 2011 peaks represent the ‘head’ of a massive ‘head and shoulders’ pattern which would project a major
decline to around 135, just above the autumn 2008/March 2009 lows. However, as these stop-loss levels have so
far held, the close of BIGI decisively above the 220 level has confirmed that this major multi-year support level has
held, and is most likely a base for a sustained rally. If the latter scenario develops, we would expect medium and
long-term targets as high as the 275 and 300 levels, respectively.
The longer-term outlook for Israeli equities continues to be firmly bullish as the index has re-entered the channel
connecting the 2008/2009 lows, as illustrated in the BIGI five-year chart, which spans the entire 2008-2009 global
financial crisis. The longer-term outlook will become even more bullish if Israeli Global Equities decisively breaks
through the upper band of this channel which has crept up to the 240 level. If this breakout occurs, we see the
projected upside potential of the index to be at the 300 level by the end of 2013, though most likely following a
break at the resistance level of 250-260 (depicted by the solid green line on the 6-year chart below) and a
consolidation at the 2011 high of 275.
Market Trends- Technical Analysis
Source: BlueStar Global Investors LLC (January 1 2007- April 30 2013)
Fundamental Outlook
The key issues in the fundamental and structural outlook for
Global Israeli Equities include foreign investment and liquidity
on the Tel Aviv Stock Exchange; regulatory risks aimed at
increasing competition in the broader economy; Israel’s
corporate structure problems (ie: “corporate pyramids”); and
geopolitical events.
The TASE and Global Index Categorization
In March, the Tel Aviv Stock Exchange extended its trading
hours to 5:30 p.m. Israeli time with the hope that the
extended trading hours would lead to higher volumes on the
Tel Aviv Stock Exchange (as more trading hours per day would
overlap with markets in different time zones around the
world). In April, Morgan Stanley Capital International (MSCI)
announced that it will decide whether to include Israel in its
European regional indexes by end-June. Israeli exchange
officials and regulators are hopeful that MSCI will decide to
include Israel, which would allow managers of European
portfolios to include Israel in their investment universe and
bring more investment to Tel Aviv-listed shares. We are
more skeptical, and believe that the chances of Israel’s
inclusion in MSCI Europe are less than 30%, as the decision-
process is heavily skewed toward the views of MSCI’s
institutional users in the EMEA region… But we’d be thrilled
to be wrong in this view!
Foreign investments in Israeli start-ups are rising and Globes’
reported in April that 43% of venture capitalists expect the
number of high tech exits to grow in 2013. We are excited to
see that many Israeli companies, such as Israel Corp.
(ILCO:TASE), Teva (TEVA:TASE,NYSE), Elbit Systems
(ESLT:TASE,NASDAQ), and Orbotech (ORBK:NASDAQ) are
engaging with and expanding operations in the Far East. This
adds to the geographic diversification of Israeli Global
Equities’ income statements and fosters stronger ties with an
important region of the world. Prime Minister Netanyahu’s
early May trip to China is also expected to deepen Israeli
business ties with the world’s second largest economy. In
late April, the Israeli Cabinet approved an open skies
agreement with the European Union despite a short strike by
employees of Israel’s three airlines. The agreement is
intended to allow lower ticket prices and liberalize air travel
between the EU and Israel. Its implementation is likely to
bolster Israel’s tourism industry and lower travel costs for
Israeli residents.
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Regulation and Corporate Pyramids
The new Israeli government seems to be very serious about
increasing competition and fixing the problem of corporate
pyramids in Israel’s economy. In April, the Prime Minister’s
cabinet approved the “Concentration in the Economy Law.”
This law addresses three main issues: the overall weight of
concentration nationwide and competitiveness in
privatizations made by the government; restrictions on
business pyramids; and separation of financial and non-
financial holdings. The goal of increasing competition in Israel
is good for consumers because it leads to economic growth as
it lowers barriers to entry for new innovative businesses. As
barriers to entry are broken, the cost of living goes down.
Corporate pyramids create huge moral hazards in decision-
making by executives at some of Israel’s largest financial and
non-financial institutions. The Concentration in the Economy
Law seeks to resolve the problem of corporate pyramids in
part by placing restrictions on board members and by
restricting financing options for companies which have been
funding operating expenses or dividend payments with funds
that typically wouldn’t be available to them if not for the
corporate pyramid structure. Furthermore, by separating
financial and non-financial holdings, the Law will even further
reduce the moral hazards and asymmetric information
problems that come with corporate pyramids. Furthermore,
the divestment of former group companies to new and
motivated independent ownership should unlock hidden value
and faster corporate growth.
Geopolitics
Israel’s relations with Turkey are improving, which is generally
a positive development, though it might have had the negative
effect of solidifying alliances between nations in the region
that are hostile to Israel. It should be noted that trade with
Turkey barely slowed in the past two years, except in the
tourism and defense equipment areas. Israeli airstrikes on
weapons depots in Syria in April and early May could,
unfortunately, result in a range of worrisome outcomes. We
continue to monitor military developments in the north of the
country but the conflict does not currently present a threat to
the Israeli economy or capital markets. There have also been
small skirmishes on the Israel-Gaza border. Lastly, there are
anti-Israel activist groups seeking to do harm to Israel’s
economy. For example, the European Union is considering
labeling any Israeli export products that are manufactured in
the West Bank and Golan as being made in “settlement
territories.”
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Economic and Fiscal Outlook
The Bank of Israel’s State of the Economy Index rose in March by
0.1%, a lower rate than in January and February of 2013. The
rise in the index in March was the result of increases in industrial
production, and in the trade and services revenue indices.
Negative factors in March were exports, consumer product
imports, and imports of manufacturing inputs. The
unemployment rate fell by 10 basis points in March to 6.5%. The
average daily number of available jobs rose by 1.6% between Q4
2012 and Q1 2013 against a back drop of a rising number of
layoffs. This indicates that the Israeli economy is creating new
jobs at an encouraging pace. The chairman of the Histradut
threatened a general public sector strike to combat government
policy aimed at reining in government spending. There was a
disruptive strike at Ben Gurion Airport in April which ended
promptly. Prime Minister Netanyahu said that his government
will not be threatened or deterred by such strikes.
With the continued rise in home prices and mortgage lending,
the Bank of Israel suggested for the first time that the
government consider new taxes to cool the housing market. The
housing minister sees home prices falling slightly in 2014 as
contractors and builders need time to bring more supply to the
market. It is important to watch how the government responds
to rising home prices by changes in its issuance of building
licenses as well as in the tax code.
In Israel, the tax laws that encourage investment in Israel are
designed to create jobs in some of the less developed areas of
the country. For example: the lowest tax breaks are given to
corporations in Tel Aviv and higher tax breaks are given to
corporations in more rural areas of the country. If there is a
change to this law (as there may be), the result could be that
fewer jobs will be created in these “remote” areas of the
country. This would put further strain on the housing markets in
the larger cities where jobs are more plentiful. Also,
transportation plays a key role in relieving housing prices in the
larger cities, as Israelis can choose to live in more remote places
if they can commute to their jobs in the cities more easily.
Given the combination of a modestly rising CPI, rising home
prices, steady but fragile economic growth, and balance of
payments changes, we do not see the Bank of Israel changing its
policy interest rates in the next several months. While we view
the strengthening shekel as a positive for the Israeli consumer
and as a vote of confidence in Israel’s government, corporate
creditworthiness, and prospects for economic growth, the rising
shekel does have the negative
consequence of making Israeli exports less competitive on the
pricing front. As the Israeli natural gas industry brings the
country closer to energy independence and to being a net
exporter of energy resources, it will become increasingly
necessary for the Bank of Israel to add to the supply of shekels
in the foreign exchange market, which will grease the wheels
of economic expansion. In April, once the shekel firmly
crossed the NIS 3.60/$ level, the Bank of Israel began to
intervene, but the Shekel continued to appreciate. This is an
important development for global investors to follow closely.
We believe that, despite the strains on Israel’s exporters,
investors will view the strong and stable local currency as
desirable and seek to own Shekel-denominated financial and
alternative assets going forward.
The government budget deficit tripled in Q1 2013 from a year
earlier and ended March at 4.5% of GDP on higher
expenditures and lower tax receipts. The government is
planning a series of tax increases and spending cuts, though
the finance ministry admits that it will miss its budget targets
in 2013 and 2014; the ministry may raise its target budget
deficit level from 3% of GDP in 2013 to over 4% of GDP in 2014
in order to manage expectations.
Despite the budget concerns, Fitch rating agency reaffirmed
Israel’s A credit rating and expects Israel’s 2013 GDP growth to
be 3.7%. Fitch also rated the Shekel A+ with a stable outlook.
It stated, regarding the Israeli economy: “Israel has strong and
well developed institutions and a diverse and advanced
economy. Human development indicators and GDP per capita
are significantly higher than peers and the education system
and business environment promotes innovation. The macro-
economic policy framework is well developed and has been
supportive… Israel has been more resilient and less volatile
than peers.”
Overall, we remain quite bullish on Israeli Global Equities in the
short, medium and long term. We were not deeply
discouraged to see Israeli Global Equities consolidating or
pulling back in April. We believe the upside potential from
these levels outweighs the downside risks, and retaining or
opportunistically adding to an Israeli equity overweight during
consolidation or on sharp pullbacks would be prudent.
Amidst significant geopolitical and global economic challenges, Israel’s economy continues to outperform its OECD peers, as well
as many Emerging Markets. Its equity market has, unsurprisingly, been buffeted by Europe’s economic crisis and the global
downtrend in stock markets. However, the long-term attraction of Israeli stocks remains intact, and the global nature of Israel’s
equity market makes it naturally diversified vis-à-vis regional tensions in the Mideast. We continue to believe that a broad
selection of Israeli stocks provides exposure to both global and domestic economic growth. Such broad-based Israeli equity
exposure potentially offers ‘the best of both worlds’ -- Developed Market stability, and the demographics and growth potential
of an Emerging Market.
BlueStar Israel Global Index
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These are not recommendations to buy or sell any security © 2013 BlueStar Global Investors, LLC
Israel vs Global Benchmark Performance Israel Benchmark Sector Exposure
U.S. vs Israel Equities (1987 – Present)
Sector BIGI MSCI -
EIS
FTSE
Israel TA-25 TA-100
Technology 25.9% 9.0% 6.4% 10.8% 9.8%
Health Care 24.4% 22.9% 48.2% 20.1% 23.1%
Financials 18.6% 32.2% 22.8% 29.6% 29.7%
Oil & Gas 9.3% 5.3% 2.1% 13.3% 10.7%
Basic Materials 8.0% 14.9% 10.7% 12.9% 11.4%
Industrials 3.9% 3.8% 2.0% 2.4% 3.8%
Consumer Services 3.7% 1.1% 0.7% 0.0% 2.1%
Telecommunications 3.4% 6.8% 5.0% 8.8% 6.3%
Consumer Goods 2.0% 3.5% 1.7% 2.3% 2.7%
Utilities 0.9% 0.6% 0.4% 0.0% 0.5%
Q1 '13 1yr. 3yrs. 5yrs. 10yrs. 15yrs.
ACWI 6.61% 11.16% 8.34% 2.63% 9.92% 4.55%
EAFE 5.25% 11.81% 5.50% -0.39% 10.19% 4.19%
MSCI EM -1.79% 2.09% 3.51% 1.35% 17.38% 8.67%
S&P 500 10.61% 13.96% 12.67% 5.81% 8.53% 4.27%
MSCI
Israel 7.11% -5.32% -10.74% -2.02% 9.95% 6.25%
TA-100 7.65% 8.71% -0.92% 2.99% 15.30% 8.91%
TA-25 7.17% 12.26% 0.95% 3.95% 16.94% 9.44%
BlueStar 7.61% 4.34% 0.36% 5.34% 17.25% -