Israeli Stocks Climb to Record as Growth Accelerates

Israeli Stocks Climb to Record as Growth Accelerates (Update3)

By Ronit Goodman

April 6, 2010  (Bloomberg) -- Israel’s benchmark stock index advanced to a record high on speculation accelerating economic growth will lead to rising corporate earnings.

The TA-25 Index climbed 0.4 percent to close at 1,237.85 in Tel Aviv, surpassing the previous record of 1,237.13 on Oct. 31, 2007. The gauge reached an intraday high of 1,242.39. The benchmark’s record intraday level was 1,248.8 on Nov. 1, 2007.

“The economy will remain strong and continue to positively impact companies’ results and, therefore, positively impact the equity market,” said Yaron Fridman, equity strategist at Bank Hapoalim Ltd. in Tel Aviv.

The gauge of Israel’s 25 largest companies has more than doubled from a 2008 low, driven by energy shares such as Delek Group Ltd. Benchmark indexes in Sri Lanka, Tunisia, Chile, Colombia, Mexico, Indonesia and Turkey also have bounced back to all-time highs since the global bear market ended in March 2009. 

Aggregate revenue of companies in the TA-25 index grew about 20 percent in the fourth quarter while profit soared 1,230 percent, Fridman wrote in a March 25 report.

Perrigo Co., a manufacturer of store brand over-the-counter pharmaceuticals that carries a 9.5 percent weighting in the index, gained 2.3 percent today. The company received U.S. Food & Drug Administration approval to market a generic version of a topical acne vulgaris antibiotic marketed by Steifel Laboratories Inc. NICE Systems Ltd., the manufacturer of digital-recording surveillance products that makes up 4.9 percent of the gauge, increased 2.8 percent.

Growing Economy

Israel’s economic growth was 0.7 percent in 2009, compared with a 2.4 percent contraction in the U.S. The Bank of Israel on Jan. 11 raised its 2010 growth forecast to 3.5 percent from 2.5 percent, citing “positive” information on the global and local economies. Bank Leumi Le-Israel Ltd., the country’s largest lender on March 25 increased its forecast for economic expansion to 3.8 percent from 3.5 percent. The unemployment rate fell to 7.4 percent in the fourth quarter, the lowest level in a year, as growth accelerated.

Energy stocks soared after the country’s largest discovery of natural gas was reported in January 2009. Delek Drilling LP and Avner Oil & Gas Ltd., partners in the find in the Mediterranean Sea off Israel’s coast, are up about five-fold since the announcement.

Delek Group, Isaac Tshuva’s holding company that controls about 32 percent of Tamar through Avner and Delek Drilling, has surged more than six-fold.

--With assistance from Michael Patterson in London. Editors: Susan Lerner, Claudia Maedler.

Israel Aid Pays U.S. Dividends That Exceed Cost: Cong. Steve Rothman

Israel Aid Pays U.S. Dividends That Exceed Cost

Commentary by Steve Rothman

April 7 (Bloomberg) -- The argument that American military aid to Israel is damaging to the U.S. is not only erroneous, it hurts the national security interests of this country and threatens the survival of Israel.

U.S. support for Israel is essential, not only for Israel’s national security, but for America’s. Every bit of that support -- and more -- withstands all reasonable scrutiny.

Under the 2010 U.S. budget, about $75 billion, $65 billion and $3.25 billion will be spent on military operations and aid in Afghanistan, Iraq and Pakistan during this fiscal year, respectively. Israel will receive $3 billion, in military aid only. There is no economic aid to Israel, other than loan guarantees that continue to be repaid in full and on time.

There isn’t enough space here to discuss the relative merits of the expenditures in these other countries, but we already know the critically important return the U.S. gets for helping its oldest, most trusted ally in the strategically important Middle East -- the most powerful military force in that region, the pro-U.S., pro-West and democratic Jewish state of Israel.

Here’s how.

First, it’s important to remember that about 70 percent of the $3 billion aid must be used by Israel to purchase American military equipment. This provides real support for U.S. high- tech defense jobs and contributes to maintaining our industrial base. This helps the U.S. stay at the very top in the manufacturing of our own cutting-edge military munitions, aircraft, vehicles, missiles and virtually every defensive and offensive weapon in the U.S. arsenal -- with the added contribution of Israel’s renowned technical know-how.

Research Cooperation

Second, the U.S. and Israel are jointly developing state- of-the-art missile defense capabilities in the David’s Sling and Arrow 3 systems. These two technologies build on the already successful Arrow 2, jointly developed by our two countries, which is already providing missile defense security to Israel and U.S. civilians and ground troops throughout the region. The knowledge the U.S. gains from these efforts also has a positive multiplier effect on applications to other U.S. military and non-military uses and U.S. jobs.

Third, given Israel’s strategic location on the Mediterranean, with access to the Red Sea and other vital international shipping and military lanes of commerce and traffic, it is critically important to the U.S. that Israel continues to serve as a port of call for our troops, ships, aircraft and intelligence operations.

Forward Base

Israel also has permitted the U.S. to stockpile arms, fuel, munitions and other supplies on its soil to be accessed whenever America needs them in the region.

Fourth, America’s special relationship with Israel provides the U.S. with real-time, minute-to-minute access to one of the best intelligence services in the world: Israel’s. With Israeli agents gathering intelligence and taking action throughout the Middle East and, literally, around the world, regarding al- Qaeda, Hezbollah, Iran and Hamas, among others, the U.S. receives invaluable information about anti-U.S. and terrorist organizations and regimes.

Fifth, imagine the additional terrible cost in U.S. blood, and the hundreds of billions more of American taxpayer dollars, if Saddam Hussein had developed nuclear weapons, or if Syria possessed them.

Then remember that it was Israel that destroyed the almost- completed nuclear reactor at Osirak, Iraq, in 1981 and Syria’s nuclear facility under construction at Deir-ez-Zor in 2007.

Foiling Iran

And think about the many operations that Israel’s Defense Forces and intelligence agents have undertaken to foil, slow and disrupt Iran’s efforts to develop a nuclear weapons capability. A nuclear-armed Iran would threaten the lives of hundreds of thousands of Americans in the region, all of Iran’s Arab neighbors, the world’s largest oil supplies and those who rely on that oil. It also would provide anti-U.S. terrorists with access to the most lethal Iranian technology and probably set off a nuclear arms race in the region.

For about 2 percent of what the U.S. spends in Afghanistan, Iraq and Pakistan this year, Americans can take pride in the return on our investment in aid to Israel.

And with Israel’s truly invaluable assistance to America’s vital national security, we can take comfort that -- in actions seen in Tehran and Damascus and noticed by al-Qaeda and other anti-U.S. terrorists everywhere -- the U.S. is safer and made more secure because of the mutually dependent and beneficial relationship between the U.S. and Israel.

(Steve Rothman is a Democratic congressman from New Jersey who serves on the House committees responsible for U.S. military and foreign aid. The opinions expressed are his own.)

To contact the writer of this column: www.rothman.house.gov
http://www.businessweek.com/news/2010-04-06/israel-aid-pays-u-s-dividends-that-exceed-cost-steve-rothman.html