Barclays Capital came out predicting a quick end to the shallow Israeli recession, and a return to decent growth of 2.9%  by next year.  Keep in mind that the Israeli economy was late to the ‘recession game’ and looks to be an early ‘exiter’ from economic turmoil as well.

With all this great news Barclays said that they expect an Israeli Shekel/USD exchange rate of 3.65 buy the end of the year. That’s a big move from the 3.93 area that the currency is trading at now.

According to Globes: “Barclays sees a less severe recession in Israel, and relatively quick growth recovery. The investment house bases its optimism on the fact that about 75% of Israeli exports are high-tech goods, and Barclays says that a rise in the Tech-Pulse Index - showing a US high-tech recovery - points to stronger Israeli exports. The Tech-Pulse Index, measured by the San Francisco branch of the US Federal Reserve, tracks the US information technology sector.”

It looks like we have started to see this happen. As Tech has led the stock market turnaround in the US, Israeli stocks that trade in the US have been flying, up over 33% this year. Keep in mind that, like it or no, President Obama’s push for alternative energy sources will be huge for Israel, as Israel is one of the big global players in cleantech and water technology. If this trend of a ‘tech led recovery’ continues, look for the Israeli hi-tech scene, from small and mid-cap tech plays on the NASDAQ to M&A to Israeli VC, to have a very strong 2nd half of ‘09, and lights out for 2010.

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With most Israeli M&A involving hi-tech, it was interesting to note that an old brick and mortar retailer, Sears Holdings, decided to ante up for an Israeli company.  Sears basically saved the Israeli start-up Delver Ltd. by purchasing the company. Delver has had trouble raining new money and was on the verge of collapse.

According to Globes: “Delver co-founder and CEO Liad Agmon will move to the US and become a VP at Sears. Delver’s employees will continue to work in Israel and the company will operate as a Sears’ development center. Delver will continue development of its search engine that improves the relevancy of web search results by prioritizing these results based upon the searcher’s social network, as well as new products.The acquisition fits in with Sears’ policy to get into online services. As part of the retailer’s restructuring in early 2008, it reorganized into five relatively independent units: operating businesses, support, brands, e-commerce, and real estate. Sears chairman Edward Lampert is the owner of hedge fund ESL Investments Inc., which controls the company. ”

Nice to know that even old brand names like Sears, like to go shopping in Israel.

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Citing risks in Israel, IDB head Nochi Dankner is looking to invest large amounts of money outside of Israel. According to Globes: “Dankner said, “IDB wants to acquire more overseas companies. We are investigating additional deals and not only in the financial sector. I am certain that IDB will continue to expand its global portfolio.” He continued, “There are risks in Israel, and therefore it is only logical that a group like IDB would want to undertake activities outside of the country.”

While many would say that this is a bad sign for the Israeli economy,  I think that there are some good things that can come out of this. If Dankner starts to focus investing away from Israel, this may just open up Israeli investments to some unfamiliar faces. It’s well known that about 10 local families control a huge segment of the Israeli economy. For the health of the economy it would be great to see some new, fresh faces, take the investment reigns of the Israeli economy.

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The deal that took Israeli tech firm NDS private after a buyout from Newscorp (NYSE: NWS), was completed. According to Globes: “NDS Group plc is now a private company, after the High Court of Justice in England and Wales approved the remaining elements of the share buyout by Robert Murdoch’s News Corporation and two subsidiaries of funds advised by Permira Advisers LLP, effective today. NDS’s share was delisted from trading on Nasdaq yesterday. News Corp and Permira bought the public’s stake in NDS at $63 per share for a total of $3.7 billion.”

This marks the end of one of Israel’s better performing stocks.

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