I spy speculators
There has been exceptional and unprecedented activity by foreign investors in Israel's financial markets in recent months. Data from the Bank of Israel about the extent and nature of their activities on Israel's capital markets point to
however lively speculation on their part, clearly exploiting foreign currency market conditions, and interest rates set by Governor of the Bank of Israel Prof. Stanley Fischer.
Economists at the Bank Leumi (TASE: LUMI) economics division noted the moves, and in their latest weekly survey they presented worrying statistics: In the period January to June this year, foreign investors invested about $4.5 billion in negotiable securities. Looking just at January-April (in May and June there were net sales), acquisitions of securities by foreign investors reached $6 billion - more than the totals of 2007, 2008, and 2009 combined.
These massive purchases were focused specifically on Treasury bills issued by the Bank of Israel. The volume of Treasury bills bought by foreign investors is unprecedented by any measure. It rose from 1.5% in January 2009 to 10% in January 2010, and to 22% by May. In absolute figures, the value of treasury bills held by foreign investors rose from NIS 1.1 billion at the beginning of 2009 to NIS 8.8 billion at the beginning of 2010, to NIS 24.5 billion by the middle of this year.
