Israelis Wipe Out Foreign Investment Gap - and Then Some

For the first time ever, Israelis hold more foreign assets than foreigners hold Israeli assets, the statistics department of the Bank of Israel reports.

For the first time ever, Israelis hold more foreign assets than foreigners hold Israeli assets, the statistics department of the Bank of Israel stated.

Israel wiped out its deficit to foreign investors in the second quarter, whose investments in Israel decreased in value by about $16 billion, and closed the quarter with surplus assets of about $1 billion.

The main reason for this is that the value of stocks held by foreign investors decreased by 17% during that quarter.

As of the end of the second quarter 2010, foreigners held a total of $222 billion in Israeli assets.

During the first half of the year, the total value of foreign assets held by Israelis decreased only slightly, by $700 million, to $223 billion. The public invested an additional $3 billion in foreign stocks, and the Bank of Israel purchased another $3 billion or so in foreign currency, but this did not offset the declining value of the public's assets, mostly due to the decline in foreign stock prices and the strengthening of the dollar against the euro, which caused euro assets held by Israeli investors to lose value in dollar terms.

The proportion of foreign assets in Israelis' overall portfolios increased in the second quarter. Meanwhile, the proportion of bank deposits and financial investments decreased, said the bank.

Despite the drop in the price of Israeli stocks, which was responsible for decreasing foreigners' holdings here by $13 billion, foreign residents barely changed their pace of investment in local shares.

The $1.6 billion that foreigners invested in Israeli government bonds was offset by foreigners' sales of Israeli stocks.