Privatization Brings International Investors Back to the Tel Aviv Stock Exchange

The Israeli government is planning to offer 14% of the shares of Bezeq, Israel Telecommunication Corporation, for some $370 million in April. International investment banks are showing an avid interest in the offering, which is expected to be the largest ever in the history of the Tel Aviv Stock Exchange. The largest offering to date was the government's $300 million tender offer for 30% of Israel Chemicals' shares in December 1998. At the end of last week, the government and Bezeq chose the leading underwriters. The privatization of Israel's largest banks is continuing as well. Last week, the government sold another block of Bank Leumi's shares, amounting to 2.5% of the bank's equity. The shares were sold to Lehman brothers, the winning bid in a tender that included Goldman Sachs and UBS. In April 1998, Lehman Brothers won a similar tender when it purchased 2% of Bank Leumi's shares. TASE's Managing Director, Saul Bronfeld said: "The success of privatization proves that the Tel Aviv Stock Exchange is an attractive venue for foreign investors. Despite the drop in the number of issues in recent months, the TASE's allure has not declined. Large, high quality companies continue to be a source of attraction for foreign and local investors. The continuation of privatization during the coming year will further increase the international interest in Israel." Foreign analysts are optimistic regarding the market's future. In its February market commentary, Salamon Smith Barney analysts recommended increasing Israel's weighting in the emerging markets portfolio from 2.3% under the IFCI's current benchmark to 7.3%: "We suggest overweighting Israel, whose valuations are attractive and risks are moderate". ING Barings believes that the TASE's share indices will rise by 19% in 1999 and that the inflation rate will fall to 5%. The bank's economists expect the TA - 100 index to reach a level of 345 points by the end of the year. The Tel-Aviv Stock Exchange (TASE) was founded in 1953. The Exchange is owned by its 28 member firms and is closely supervised by the Israel Securities Authority, whose main mission is protecting investors. The TASE provides highly-advanced fully-electronic trading services for shares, bonds and Treasury-bills and it operates two trading floors for derivatives. All trades are cleared and settled by the TASE clearing House. The TASE offers the international investor the appealing combination of attractive investment opportunities and developed market services.