Israeli equities underperform as judicial reform proposes to hang over markets and economic outlook.
Israeli stocks, as defined by the BlueStar® Israel Global Index (BIGI®), gained juse 0.68% in the first quarter of 2023, significantly underperforming U.S. and international developed market equities.
Israeli technology stocks, as defined by the BlueStar® Israel Global Technology Index (BIGITech®), gained 5.14% in Q1, outpacing the broader Israeli equity market but underperformance U.S. and global tech peers by more than 15%.
The Bank of Israel raised its policy interest rate in February by another 0.50% to 4.25%. The Bank of Israel has now raised rates by a full percentage point in 2023 to date.
The Israeli economy, which entered 2023 on a strong note, boasting lower inflation, higher growth, and a notable fiscal surplus, is outpacing other developed nations.
Proposed reforms to the power of Israel’s judiciary have made their mark on Israel’s equity markets as domestically oriented stocks dramatically underperformed their globally oriented peers in Q1, by a wide margin of 17.69%.
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What’s inside:
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- 1. Highlights
- 2. Equity Market Performance
- 3. Economic and Political Update
- 4. Israeli Economic Exposure Indexes
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The BlueStar Israel Global Index (BIGI or BLS & BLSTR INDEX on Bloomberg) is the broadest and deepest benchmark for Israeli equities trading. BIGI is tracked by an NYSE-listed ETF, as well as an Israel-domiciled index fund.
The BlueStar Israel Global Technology Index (BIGITech or BGTH & BGTHTR INDEX on Bloomberg) is the broadest and deepest benchmark tracking the performance of Israeli companies operating in innovative sectors such as information technology, defense technology, clean technology, and biotechnology. BIGITech is tracked by an NYSE-listed ETF. In addition, there are two Israel-domiciled investment vehicles tracking BIGITech managed by KSM.
It is not possible to invest directly in an index.
The information herein represents the opinion of the author(s), but not necessarily those of ETFMG or MarketVector Indexes. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Not intended to be a forecast of future events, a guarantee of future results, or investment advice.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-800-889-1438), or by visiting www.etfmg.com/ITEQ. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Investment in securities of Israeli companies involves risks that may negatively affect the value of your investment in the Fund. Among other things, Israel’s economy depends on imports of certain key items, such as crude oil, coal, grains, raw materials and military equipment. Foreign investing involves special risks such as currency fluctuations and political uncertainty. Funds that invest in smaller companies may experience greater volatility. Funds that emphasize investments in technology generally will experience greater price volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the BIGITech® Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.
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