Israel Market Status Shows Be Careful for What Is Wished

Israel won the approval of the world’s arbiter for global stock markets three years ago, when MSCI Inc. promoted the country to the ranks of developed nations from emerging. Instead of a blessing, it’s turned into a curse.

As part of the MSCI Emerging Markets Index, Israel had a weighting of 2.7 percent, the 11th highest and an outsized proportion for investors focused on developing economies. Now it makes up 0.2 percent of the MSCI World Index of 33 developed nations, forcing Israeli companies to compete with those from the U.S., Europe and Japan for fund managers’ attention.