The Bank of Israel’s monetary policy committee decided to increase the amount of the institution’s foreign reserves invested in German equities at the expense of its U.S. stocks portfolio.
The committee, in an Oct. 1 vote, approved the transfer of 0.5 percent of the central bank’s reserves, which stood at a record high $79.9 billion at the end of September, to German equities from U.S. stocks. Before the change, 4.7 percent of the reserves were invested in the U.S., 0.24 percent each in Germany and France, and 0.5 percent in the U.K., according to a statement posted on the central bank’s website.
“The market operations department believes that under the current conditions in global capital markets, shifting part of the portfolio to investment in Germany conforms with the department’s portfolio management objectives,” the bank said in the statement. “The proposed change isn’t expected to affect the reserves portfolio’s overall level of risk.”
Central banks around the world are looking for alternatives to holding government bonds as yields remain low. In the month before the Bank of Israel decision, Germany’s benchmark DAX Index (DAX) rose about 6 percent, double the gain of the S&P 500 Index during the same period.
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