Call on asset managers to support Israel’s inclusion in the MSCI Europe index | Barnea Jaffa Lande & Co.

Global stock index provider Morgan Stanley Capital International (MSCI), one of the world’s largest providers of stock indexes, recently announced that it has initiated an advisory process regarding the possible inclusion of Israel in its European indices. .

The decision is expected to be made at the end of February 2022.

Such a decision will have a favorable impact on the Tel Aviv Stock Exchange and on the securities listed there. This since Israel will also be added to dozens of MSCI European secondary indices.

The importance of considering Israel as part of European territory and including it in the indices is that when global investment entities allocate investments to Europe, some of those investments will go to Israel and will serve as a “booster” for the Israeli economy. . The assessment is that the inclusion of Israel in the MSCI Europe index will result in the allocation of more than half a billion dollars to purchases of securities of Israeli companies.

MSCI Europe Index

So far, MSCI has refrained from including Israel in its European indices. Instead, Israel was included in an index designated “Europe and Middle East,” which received no massive influx of money. The Tel Aviv Stock Exchange has attempted to change this decision over the years, but without success. Now there is a real chance that Israel will succeed in being included. This depends, among other things, on the results of the investigation that MSCI is carrying out to this effect.

Financial and asset managers who wish to complete the questionnaire and support the inclusion of Israel in the MSCI Europe Index can complete it. here

The questionnaire can be submitted until January 31, 2022. MSCI is expected to make its decision by February 28, 2022.

Highlights supporting Israel’s inclusion in the MSCI Europe Index:

1. Israel is already considered by many economic organizations to be part of European territory with regard to many financial and economic aspects.

2. Israel is not assigned to any major MSCI territory in terms of clues, which is illogical given the strength of the Israeli economy.

3. Investors in MSCI’s European indices are currently losing an opportunity to diversify their investment portfolios due to Israel’s non-inclusion. They are also losing an opportunity to gain exposure to the Israeli currency, the ILS, which is a hard currency that continues to appreciate. Investors are also denied the opportunity to gain exposure to Israel’s high-tech industry.

4. The inclusion of Israel in the MSCI Europe Index will allow investment product managers to invest in Israel. Today, many managers complain that they are prevented from investing in the Israeli market because of this exclusion.

5. European indices have a lower representation of high tech companies compared to US indices. The inclusion of Israel in the MSCI Europe index will make the index more competitive with US indices in this regard.

6. Israel’s failure to include Israel in the MSCI Europe Index causes index investors to lose exposure opportunities to around 45 Israeli high-tech companies that were considered unicorns and offered on NASDAQ in recent years. . Eight percent of all tech companies in the world that are considered unicorns were founded in Israel.

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Mary I. Bruner