Bank of America Merrill Lynch has come out with a report strongly recommending Israel as a defensive haven among emerging markets. In part, this based on experience. ”True to its traditional role of GEM diversifier, Israel has outperformed EM throughout each of seven major global corrections since 1993. Based on historical data from MSCIBarra, the MXIL Index outperformed the MXEF Index by an average of 23%. In the recent 2008-2009 sub-prime financial crisis, Israel outperformed emerging markets by 30%,” analysts Haim Israel, Micha Goldberg, and Mai Doan write.
The report gives five reasons for investing in Israel now: (1) resilient economic performance vs. GEM as the local recession ended two quarters ago; (2) lack of excess positioning as investors remain underweight Israel; (3) strong currency vs. the US dollar; (4) substantial domestic liquidity support; and (5) Israel’s traditional role as GEM’s beta diversifier.
Besides Teva and the healthcare sector in general, Merrill Lynch picks out telecommunications, particularly Partner and Bezeq, and the banks, particularly Leumi and Mizrahi-Tefahot, as good bets. “Although Teva and the healthcare space are perceived by the market as natural candidates to park money in times of uncertainty, we believe this could be the time for Israeli banks and telcos to shine,” the report says.
Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2009
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