Call for Asset Managers to Support Israel’s Inclusion in MSCI Europe Index | Barnea Jaffa Lande & Co.

Global equity index provider Morgan Stanley Capital International (MSCI), one of the largest equity index providers in the world, recently announced that it has opened an advisory process regarding the possible inclusion of Israel in its European indices.

The decision is expected to be made at the end of February 2022.

Such a decision will have a beneficial effect on the Tel-Aviv Stock Exchange and the securities listed on it. This is because Israel will also be added to dozens of secondary European indices from MSCI.

The importance of considering Israel as part of European territory and including it in the indexes is that, when global investment entities allocate investments to Europe, some of these investments will flow to Israel and serve as a “booster” to the Israeli economy. . It is estimated that Israel’s inclusion in the MSCI Europe Index will result in the allocation of more than half a billion dollars in purchases of securities of Israeli companies.

MSCI Europe Index

Until now, MSCI had refrained from including Israel in the European indices. Instead, Israel was included in a designated “Europe and the Middle East” index, which did not benefit from a huge influx of money. The Tel-Aviv Stock Exchange has tried to change this decision over the years, but without success. Now there is a real chance that Israel will succeed in being included. It depends, among other things, on the results of the research that MSCI is conducting.

Financial and asset managers who wish to complete the questionnaire and support Israel’s inclusion in the MSCI Europe Index can complete it here

The questionnaire can be submitted until January 31, 2022. MSCI is expected to make a decision on February 28, 2022.

Highlights supporting Israel’s inclusion in the MSCI Europe Index:

1. Israel is already regarded by many economic organizations as part of the European territory with regard to many financial and economic aspects.

2. Israel is not assigned a major MSCI area indices, which is illogical given the strength of Israel’s economy.

3. Investors in MSCI’s European indices are currently missing out on an opportunity to diversify their investment portfolios due to the non-inclusion of Israel. They are also missing out on an opportunity to be exposed to Israel’s currency, the ILS, a strong currency that continues to rise. Investors are also denied the opportunity to be exposed to Israel’s high-tech industry.

4. The inclusion of Israel in the MSCI Europe Index allows investment product managers to invest in Israel. Today, many managers complain that they cannot invest in the Israeli market because of this exclusion.

5. European indices have a lower representation of high-tech companies compared to US indices. The inclusion of Israel in the MSCI Europe Index will make the index more competitive against US indices in this regard.

6. Israel’s non-inclusion in the MSCI Europe Index causes investors in the index to miss out on exposure to about 45 Israeli high-tech companies that have been considered unicorns and listed on the NASDAQ in recent years. Eight percent of all technology companies in the world that are considered unicorns are founded in Israel.

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