Written by: Aaron Katsman | May 12, 2009
Even though the Israeli real estate market has barely taken a hit in the current economic slowdown, Israeli consumer confidence has. That must be a reason to explain why fewer and fewer Israeli’s are looking to make real estate purchases.
According to Globes: “The economic uncertainty has caused Israelis to defer dreams of buying a first apartment or moving to a new one. In April, 6.6% of Israelis said that they planned to buy a new or second-hand apartment in the next six months, compared with 7% of Israelis in March, according to the Consumer Confidence Index, compiled by Globes Research and Kesselman and Kesselman - PricewaterhouseCoopers Israel. This is the lowest level since January 2009, and before that - in January 2006.
The low level of planned home purchases in April is unexpected, since the Consumer Confidence Index jumped in April to 76.1 points, its level before the collapse of Lehman Brothers in September 2008.”
Let’s see if this lower demand will translate into lower home prices.
Written by: Aaron Katsman | April 12, 2009
In a deal reached regarding seized Lehman Brothers assets, Bank Discount will get first dibs on those assets.
According to Globes: “The two banks agreed that Discount Bank will receive first priority and only afterwards will Bank Leumi receive funds. The compromise has the status of a judicial ruling according to the reports of Bank Discount. Sources in the banking system estimate that there are more than NIS 600 million of Lehman Bros. in Discount Bank., the same amount written off by the two Israeli banks in debts from the US investment bank. Therefore, if the legal process is realized vis-à-vis Lehman Bros. trustee, the two Israeli banks should fully realize their losses. The trustee of Lehman Bros. assets is the London accounting firm PWC and estimates are that the receivership process will take years.”
Good news for shareholders of both banks.
Written by: Aaron Katsman | September 28, 2008
With global markets reeling and investors completely having lost faith in the financial system, the question needs to be raised whether Israel will turn into safe haven for investors fleeing financial turmoil. The Shekel continues to strengthen against the USD and many Israelis have been sending money back to Israel in droves.
But I can’t imagine that in this era of a truly global economy with global interdependence, Israel will remain largely unaffected by the surrounding turmoil. It just doesn’t make sense. It’s important to note that the Israeli banks have had some exposure to sub-prime as well as both Lehman Brothers and Wamu. While Israeli banks are know for their stinginess in lending money to ‘main street’, they tend to lend money no questions asked to the 10 powerful families the control the local economy. The question is how will these families be able to weather the storm. I hate to think of what will happen if they are unable to pay back their loans. We have started to see that with tycoon Arkady Gaydamak, basically offering his businesses at fire-sale prices in order to raise cash, and one local bank, Mizrachi, actually made a credit call on him.
According to Globes, Former PM and current opposition leader Benjamin Netanyahu, says that Israel needs to take strong steps to avoid falling into economic slowdown. The article says, “We must prepare for a severe slowdown.” He goes on to detail some measures that could be taken to avoid the meltdown. “In order to create rapid growth and use the crisis to strengthen the Israeli economy, we must cut taxes, implement economic reforms, and streamline government work. If we do this, when the global economy recovers, Israel will be in better shape.”
Investors should keep an eye on how the local government reacts to the growing nervousness over the economy. Any missteps could send Israel into an economic downturn that rivals what we see in Europe and the US.
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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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Category:
economy,
macro-economics
Tags:
Benjamin Netanyahu,
economic armageddon,
economic reforms,
economic slowdown,
financial turmoil,
global economy,
global interdependence,
israeli economy,
Lehman Brothers,
stinginess,
supply-side economics,
wamu
Written by: Aaron Katsman | September 18, 2008
With prices of Israeli stocks that trade in the US getting nailed along with the broader market, the potential exists for a pick up in M&A among these companies. But a problem exists. It’s not about what price a company may or may not want to pay to buy a company, rather, there is a technical problem. Will there be any investment banks left that can bank the deal? With the demise of Lehman Brothers, by far and away the busiest investment bank in Israel, and the constant rumors of other large US investment banks on the verge of collapse, who is going to be able to fill the void, penetrate the local market and do the deals?
The last time the market experienced a bursting bubble, back in 2000-02, when the hi-tech bubble burst, Israel had an exodus of investment bankers, and as a result, little in the way of M&A took place. Two large firms stayed during that crisis, Lehman and Citigroup. The impact was devastating and it took a few years before we had an upswing in M&A. Let’s hope that the current crisis isn’t deja vu all over again.
Please see our Disclaimer HERE.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
