Israel-Hamas clash: A limited impact on Israel’s economy (Long-term global confidence in Israel’s economy)

Straight from the Jerusalem Boardroom #173, November 30, 2012

1.  The Atlanta-based NCR, the global leader in retail software and services, acquired Israel’s Retalix for $800MN (Globes Business Daily, November 30, 2012).

2.  The Larchmon, NY-based Bessemer Venture Partners led – along with the London-based Index Ventures and the Palo Alto-based Accel Partners - a $25MN round of private placement in Israel’s MyHeritage (Globes, November 30).  Telefonica de Espana, the Spanish telecommunications giant, led – along with Singapore’s SingTel, the Mountain View, CA-based Mozilla Firefox, the Hong Kong-based Li Ka-Shing’s Horizons Ventures and the Menlo Park-based Draper, Fisher, Jurvetson - a $25MN round of private placement in Isreal’s EveryThing.ME (November 30).  Li Ka-Shing’s Hutchison acquired Israel’s technology incubator, Kinrot (Nov. 12).

3.  Britain’s BrightSource and France’s Alstom won tender for 121 Megawatt solar thermal power plant in Israel.  The scope of the expected investment is $650MN (Globes, November 19). 

4.  Italy’s (giant) Edison Energy follows in the footsteps of Noble Energy, entering Israel’s natural gas exploration, concluding a contract with Israel’s Ratio Oil Exploration.  Under the agreement, Edison will be the well-operator for the Gal licenses - which covers 1,770 square kilometers in the southwest corner of Israel's exclusive economic zone with high potential of oil and natural gas - with 20% of the rights in the permit's two licenses and an option on another 20% (Globes, Nov. 25). 

Substantial Norwegian energy companies – such as SubSea7 and SeaDrill - consider participation in Israeli explorations. Currently, Norway’s AGR operates in Israel (Globes November 21). 

5.  Len Rosen, CEO of Britain’s Barclays Bank in Israel: “I have been in Israel during the last six years, but the only real violent event which I witnessed was September 11 in NYC…. I have not noticed a decline in the global interest in Israeli companies as far as Mergers and Acquisitions and investments in stock and bonds.  I have noticed a decline in the scope of foreign investments, which is a derivative of a global decline… and global uncertainty…. There is a global decline in M&A due to the European crisis and American uncertainty….While security-oriented events have had a limited impact on Israel’s economy, the significant impact has been caused by global financial events…. Israel benefits form a sustained flow of investments and acquisitions…. Israel’s high tech and healthcare are unique, and its recent energy explorations and expansion of infrastructures are common…. Israel’s Treasury and Central Bank have displayed fiscal responsibility (Globes, November 23).”

6.  Precedents to the limited, short-term impact of military clashes upon Israel’s economy.  The Tel Aviv Stock Exchange registered a 3% decline upon the launching of the 1982 war on the PLO in Lebanon, but surged 5% (net) two months later.  The August 1990 Iraq’s invasion of Kuwait caused a 14% drop on TASE with a 16% (net) increase two months later. During the September 1996 Palestinian riots (following the inauguration of the Western Wall Tunnels), TASE declined 6%, but rebounded 5% (net) two months later. September 11, 2001 depressed TASE by 11%, followed by a 23% expansion two months later.  During the 2006 war on Hizballah in Lebanon, TASE suffered an 8% decline, but two months later demonstrated a 16% (net) increase.  The December, 2008 Operation Cast Lead against Hamas in Gaza triggered a 10% fall on TASE, which turned around with a 25% surge  two months later (Ma’ariv daily, November 18).