Foreigners invested a net $1.25 billion in Israel in October, the most in a single month since March, led by the purchase of ECI Telecom Ltd. and investment in Tel-Aviv traded shares and government bonds.
Direct investment reached $1.87b., the most since July 2006, when Warren Buffett's Berkshire Hathaway Inc. purchased Iscar Metalworking Cos., the Bank of Israel said Tuesday.
Foreign investment has helped to strengthen the shekel, pushing it to a nine-year high against the dollar last week. The stronger currency has damped dollar-linked prices, keeping inflation in check, even as the economy grows at the fastest pace since 2000, according to central bank estimates.
Israel is expected to attract $9.5b. of foreign direct investment this year, the second-highest figure ever after $14.3b. last year, according to a report by the Rishon Lezion College of Management last month. Gross domestic product growth for the year is estimated at 5.4 percent, the central bank said yesterday.
ECI Telecom, a maker of telecommunications equipment, was purchased at the end of September by Swarth Group, controlled by businessman Shaul Shani, and London-based Ashmore Investment Management Ltd. for $1.2b.
Foreigners began buying up government bonds in "significant amounts" in October, for the first time since May, the central bank said. Net overseas investment in government bonds reached $213 million, while net sales for the first 10 months of the year were $282m.
Foreign investment for the first 10 months of the year fell to $9.3b. from $17.1b. the year earlier, when the figures were buoyed by the $7.6b. takeover by Teva Pharmaceutical Industries Ltd. of Miami-based Ivax Corp. and Buffett's $4b. purchase of toolmaker Iscar. Teva, the world's biggest maker of generic drugs, paid for most of the Ivax takeover with shares, which is counted as investment in Israel by foreigners.
Separately, the Central Bureau of Statistics reported that Israel's trade deficit in October widened for the seventh consecutive month as a weaker dollar pushed up the cost of imports and global prices for food and fuel rose.
The deficit, excluding diamonds, ships and aircraft, increased to a seasonally adjusted $960.8m. from $796.5m. a year earlier. Imports climbed 21% to $4.03b. while exports rose by a similar rate to $3.07b.
"The depreciation of the dollar means we are paying more in dollar terms for imports from Europe and getting less for exports, which are dollar-leaning," Helen Brusilovsky, director of the bureau's foreign trade division, said by telephone.
The shekel has appreciated about 14% against the US dollar since January 2006 as foreign investors poured $30b. into Israel and the economy marks its fifth year of growth.
Israel's trade deficit widened to an annualized $10.1b. in the first 10 months of the year, from $7.6b. in 2006.
An increase in prices of imported goods including fuel, wheat and metals is also helping to push up the deficit, Brusilovsky said.
The Cabinet this week ordered Industry, Trade and Labor Minister Eli Yishai and Finance Minister Ronnie Bar-On to establish a team to look at ways to assist manufacturers who have been affected by the erosion in the shekel exchange rate against the dollar.
