The global index company MSCI announced tonight (Monday to Tuesday) that it has decided not to include Israel in the leading stock indices in Europe. The decision was made after a survey conducted by the index company among leading asset managers and other stakeholders in the global arena.
Among the reasons for the decision, the various trading days. In Israel, trade takes place on Sundays, while in Europe it does not (and on Fridays, on the contrary). Globes has learned that the Israeli Securities Authority has announced that it will agree to adjust the trading days if that is the reason it will stand in Israel’s way of joining the index, but this did not help.
For the local capital market, this is a disappointment because the decision not to allow Israel to join the European benchmark indices prevents international investment bodies from injecting billions of dollars in investments into the Israeli capital market. The move was intended to produce increased exposure of Israeli public companies to diverse international investors, whose presence could have created great added value for the local capital market and the Israeli economy as a whole.
“The European index, for example, has investment products that follow it in the amount of about $ 170 billion, and Israel’s share could have reached between 1% and 1.5%, which could have had a huge impact on the Israeli market,” said Adv. D. Ophir Eyal, Director of the International Department and Business Development at the Securities Authority, in an interview with Globes.
The directly disappointed are the large Israeli companies that were supposed to be included in the index (such as the large banks, Azrieli, ICL, Teva, NICE, Elbit). In addition, there was a profit potential for about 100 other Israeli companies, since below the main European index there are sub-indices, such as “Europe Transport”, “Europe Technology” and more, under which other Israeli companies will be able to meet demand.
The last time MSCI issued a decision regarding Israel cost many companies and investors in the local capital market many billions of dollars. In 2010, the Index Company changed Israel’s classification from a developing market to a developed market (incidentally Israel’s joining the OECD), a move that significantly reduced Israel’s share of indices – in advance of foxes in developing countries to lion tails in developed countries. Now, the local capital market has received another disappointing line.