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Challenges And Opportunities In Israeli Industry, Launch Of The New Index – TA-Industrials

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Wednesday, May 02, 2018  04.31PM / The Ministry Of Economy And Industry And TASE’s Conference

 

Minister of Economy and Industry, Eli Cohen: “Israeli industry, which is characterized by groundbreaking innovation, is not just a source of national pride but is also a lucrative investment. The index’s launch constitutes an investment channel for both domestic and international entities that are interested in being exposed to Israeli industry” 

TASE’s CEO, Ittai Ben-Zeev: “From our perspective, the most important development is to have the public participate in the stock exchange and in the Israeli economy. We are investing a lot of efforts to create a simple and convenient way for participation in offerings to be just a “double-click” away from every Israeli” 

The first joint conference of the Ministry of Economy and Industry and the Tel-Aviv Stock Exchange (TASE) began this morning (April 25) at TASE. The conference – Challenges and Opportunities in Israeli Industry” – started off with the opening bell ceremony in the presence of the Minister of Economy, Eli Cohen, and TASE’s CEO, Ittai Ben-Zeev, to mark the launch of the new equity index – the TA-Industrials Index.


Attending the conference are leaders from the financial and industrial sectors, among them regulators and senior executives including: the chair of the Israel Securities Authority, Anat Guetta; the director-general of the Ministry of Economy and Industry, Shai Rinsky; the commissioner of the Capital Market, Insurance and Savings, Dorit Salinger; FIMI Opportunity Funds founder and CEO, Ishay Davidi; Ormat founder, Dita Bronicki; Strauss Group chair, Ofra Strauss; the director-general of the Ministry of Justice, Amy Palmer; the director-general of the Manufacturers Association of Israel, Ruby Ginal; Frutarom CEO, Ori Yehudai; Clal Insurance deputy CEO, Anat Levin; and, SKY Fund managing partner, Zvi Yuchman.


Various tools will be presented at the conference, with the aim of such tools being to promote Israeli industry and leverage investment on TASE in order to attract investors and expand the economic activity of industrial companies.


The new index, the TA-Industrials, comprises more than 80 companies from various industry sectors from across the board and will facilitate investment in the growth opportunities inherent in Israeli industry. The Ministry of Economy and Industry and TASE expect the index to provide private industrial companies with a further incentive to consider non-banking and non-governmental financing channels in order to attract investors through offerings on the Israeli stock exchange.


Testing conducted has shown that the indicative return on the TA-Industry Index, had it been launched a year ago, would have been 20%; had it been launched three years ago, the return would have been 130%.


As mentioned, the new index is composed of the shares of more than 80 companies, having an overall market value in excess of 250 Million shekels (Based on the simulation conducted on April 12, 2018 – see Appendix A) from a broad range of industrial sectors, including: pharmaceuticals, electronics and optics, metals and metal products, defense, fashion and clothing. In order to give expression to small and medium industrial companies and in order to achieve a broad diffusion, a maximum weighting of 3% has been set for a single share.


The new index faithfully reflects the image of the State of Israel as a nation of technology and innovation, and is characterized by the prevalence of high-tech companies, which also includes manufacturing companies from the technology and biomed sectors. The weight in the index of shares from the general “high-tech” sector is close to 50% (29% technology companies and 18% biomed companies – total weight 47%). The weight of traditional industrial companies is 53%.


In addition, the Ministry of Economy and Industry, jointly with the Israel Securities Authority and TASE, is promoting an analyses support program for industrial companies. The goal of the program is to enlarge the extent of the industrial companies’ exposure and it will cover both their investors and their fund-raising capability. The total cost of the program is estimated at NIS 2.5 million, which will be sourced from all the partners over three years.


Minister of Economy and Industry, Eli Cohen: “Israeli industry, which is characterized by groundbreaking innovation, is not just a source of national pride but is also a lucrative investment. The index’s launch constitutes an investment channel for both domestic and international investors that are interested in being exposed to Israeli industry. Against the background of the economic returns and the greater importance of technology, Israeli creativity constitutes a focal point for attracting investors thereby making it even more worthwhile for companies to make offerings on TASE and will provide an additional incentive for raising funds and making issuances, which will be translated into investment in the economy and into supporting growth”.


TASE’s CEO, Ittai Ben-Zeev: “I would like to thank the Minister of Economy and Industry, Eli Cohen, whose ministry is promoting and encouraging investment in the Israeli economy. During the past year, we have been restructuring TASE, as other stock exchanges around the world. In the process of our promoting the sale of the shares held by the banks and brokers, we encountered strong interest from overseas stock exchanges and investment institutions, as well as and especially, from the local capital market. It would certainly appear that the Israeli economy has something to sell to the world. We consider it important that any agreement we reach will allow the Israeli public to participate in TASE and in our country’s economy, which will not be possible if we relinquish control to a foreign exchange. This is an extremely important measure in the financial leverage of the public, in increasing its involvement in the capital market and in ensuring its participation in Israel’s success story. We are investing considerable efforts to create a simple and convenient way for participation in offerings to be just a “double-click” away from every Israeli”.


Chair of the Israel Securities Authority, Anat Guetta reviewed the Israeli and global capital market trends of recent years and in her address focused on the need to encourage industrial companies to list and on the importance of analyses publication for the general public. She broke the news that “yesterday, the ISA approved for the first time a new and original initiative that will permit funding analyses of companies making IPOs, even at the stage of their initial offering – something which was not previously possible, but which will significantly assist the offerings market”.


The Ministry of Economy and Industry works to promote Israeli industry by means of a variety of tools and measures. Industry, in all its various forms, constitutes an economic growth engine by positioning itself to take advantage of the plentiful opportunities presented by global markets, as well as providing high-quality employment opportunities for a variety of population segments. Industry’s contribution to Israel’s business product amounts to some 18%, and employ’s some 11% of the country’s work force.


TASE, which was established in 1953, fulfills an important function in Israel’s growth and development and constitutes an integral and significant component of the Israeli economy. It serves as a major growth engine for businesses, in that it enables Israeli companies to raise equity and debt from the public. TASE is the “home base” of the Israeli investing public, allowing trading to be conducted conveniently and in local currency, under one roof, in a diverse range of investment products that align with investors’ needs. In addition, TASE operates as an advanced, computerized trading arm for buying and selling securities. Currently, the shares of 452 companies are listed on TASE. In 2017, a record number of 17 new companies listed IPOs on TASE, which was higher than the number of offerings made all together in the preceding five years. 

Footnotes

According to the simulation conducted on March 3, 2018, the number of shares in the new index is taken from the following other indices:

  • Number of shares from the TA-35 Index – 10
  • Number of shares from the TA-90 Index – 22
  • Number of shares from the TA-SME60 Index – 19
  • Number of shares from the TA-Growth Index – 32
  • Simulation of TA-Industrials Index (data as of April 12, 2018)

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