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Nochi Dankner foresees 20% downturn in world markets
By Ram Dagan
Tags: Israel News, Nochi Dankner

Business magnate Nochi Dankner predicts a sharp downturn in world markets after three months of sharp gains. In private conversations with managers in his sprawling holdings group IDB, Dankner said he predicts that financial markets will retreat by 15%-20%. This assessment is the reason why group company Koor Industries recently sold part of its stake in Credit Suisse.

Altogether Koor has accrued NIS 2.2 billion in profit on its investments in Credit Suisse last year and this one.

Two months ago, when IDB group companies published their financial statements for 2008, Dankner said he believed the worst of the financial crisis is over. Indeed, since then financial assets have climbed by double-digit percent. Finance sector stocks rose particularly sharply as governments rallied around their financial systems.
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In conversation with cronies, Dankner continued to demonstrate optimism, mainly in view of the fact that the financial systems are operating again after a period of confusion and fear that resulted in a worldwide credit squeeze. The system seized up but order is being restored. That said, Dankner feels that the gains were too sharp and fail to reflect the true condition of the broad global economy, which is still in deep recession.

As for the local economy, Dankner is worried about the possibility of an inflationary outbreak, though he isn't specifically projecting one at this stage. At least to a degree, depressed demand because of the recession may hold back inflation, he surmises.

But he's also worried about the low exchange rate of the dollar, which has eroded export profits. Dankner doesn't see how the Bank of Israel can continue to influence the shekel-dollar exchange rate through its intervention in the forex market. It's been buying $100 million each business day, ostensibly to beef up Israel's foreign currency reserves. But it has passed its stated target, which was to reach reserves of about $45 billion.

Dankner isn't the only one to have scored a coup with shares of foreign banks. Two days before Dankner's exit, the royal family of Dubai netted $2.5 million from selling its financial investment in Barclays Bank of England. They had invested two weeks after Dankner bought shares in the Swiss bank in October 2008. On Tuesday, the Dubai royals announced their exit once and for all.
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