MSCI to Monitor Perception of Israel for Europe Index EntryShoshanna Solomon
Investors opposed including Israel in MSCI Inc.’s European index and the portfolio analytics provider will monitor changes in perception, the company’s global head of index management said.
MSCI decided in June against including Israeli equities in its Europe index based on its poll of more than 60 major institutions around the world, Sebastien Lieblich said in a phone interview from Geneva. New York-based MSCI surveyed investment houses, asset owners, active and passive asset managers, broker dealers and custodians, he said.
“A strong majority of investors didn’t yet see Israel as part of their European investment opportunity set,” Lieblich said. “We will continue to monitor the markets and ask the question on an ongoing basis and continue to review this.”
The bourse requested to be included to the MSCI Europe gauge in an effort to boost trading volumes. The country’s move to developed market from emerging in May 2010 was one of the factors contributing to a decline in trading volumes in Tel Aviv, the Bank of Israel said in a March 12 report.
“International investors need to adapt their views,” Lieblich said. Changing their minds is “in the hands” of the Tel-Aviv Stock Exchange, the Israel Securities Authority, and the Finance Ministry to make sure Israel “is more perceived as part of the European” portfolio, he said.
Trading volume fell 44 percent from the beginning of 2010 through the end 2012, compared with an 18 percent average global decline, the central bank said. Exchange Chief Executive Officer Ester Levanon said June 6 a move to MSCI Europe would bring an additional flow of $1 billion to $2 billion. The benchmark TA-25 Index of stocks has declined 2.7 percent since the June announcement.