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The survey results leave no room for doubt. 78 percent of the respondents said the decision to upgrade Israel was negative, while 22 percent said it would have no effect.
Israel will officially become part of the MSCI developed market indices in May 2010, and, according to the survey findings, 56 percent of overseas investors plan to change their investment portfolios in 2010 and to reduce their exposure to Israel. It should be pointed out though that about 90 percent of the participants in the survey said that they were already underweight on the Israeli market. It is therefore possible that the damage from money being withdrawn will not be as great as feared.
Most of the survey participants believe that Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA)is likely to benefit from MSCI's move, while shares of the banks, of telecommunications companies, and of other local companies will lose out.
Most of the respondents to the survey were investors in emerging markets. The questionnaire was also sent to hedge funds and investors in developed markets, but they showed little interest. Deutsche Bank explains that Israel's upgrade is not a material event for investors in developed markets.
A further interesting point is that Deutsche Bank itself does not believe in the results of its own survey. Its analysts believe that the decision by MSCI to upgrade Israel is another link in the chain of the Israeli economy's progress since the hyper-inflation of the 1980s.
To see more of the Globes or to subscribe to the newspaper, go to http://www.globes-online.com. Copyright (c) 2009, Globes, Tel Aviv, Israel Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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