Pale Euro is ‘weighing down property and tourism market’

Investor Edouard Cukierman speaks to 'The Jerusalem Post'.

February 26, 2010 05:58
4 minute read.
Edouard Cukierman

edouard cukierman 311. (photo credit: .)


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The weakness of the euro versus the shekel is having an impact on the local real estate market and tourism, said investor Edouard Cukierman.

“The weakness of the European currency is likely to have an impact on the real estate market and on tourism, negatively affecting the economy and employment. The trend seen in recent years of more and more European companies and individuals investing in Israel, in particular in real estate, has been changing recently as the euro has been weakening against the local currency,” Cukierman, chairman of Cukierman & Co. Investment House and founder and CEO of Catalyst Fund, said in an interview with The Jerusalem Post on Thursday in Tel Aviv. “The fact is that the French are more cautious about buying property in Israel. Prices of buying an apartment in Tel Aviv, by square meter, are coming close to prices of purchasing an apartment in Paris.

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“The advantage of buying at a lower price because of a strong euro is not there anymore.”

Founded in 1993, Cukierman & Co. Investment House is the leading European-focused investment house in Israel, helping local companies interested in investing and raising capital in Europe. Since its establishment, it has been engaged in transactions valued at €3 billion through private placements, initial public offerings and mergers & acquisitions.

Worldwide, investor worries about the economic situation in Greece, Spain, and Portugal have boosted the dollar while weakening the European currency. The shekel has in recent months gained versus the dollar and the euro, as evidence mounts that the local and other global economies will recover. However, over the past month, foreign investors, who in January pushed the shekel to a 15-month high, are selling the Israeli currency, as the dollar gains versus the euro on concerns about a possible debt default in Greece, according to Bank Leumi.

“Greece is not one of the major markets of Israel and its hi-tech industry and the crisis is therefore not expected to have an impact on the local economy,” said Cukierman.

The euro touched a nine-month low against the dollar last week after European finance ministers ordered Greece to prepare new deficit-cutting measures in case the government can’t show sufficient progress in reducing the shortfall by March 16. It has lost 2.3 percent versus the dollar this month as the ballooning deficit in Greece diminished the allure of the region’s assets.

“There is no serious program to drop the euro,” said Cukierman. “The chances that eurozone countries will drop the euro is unlikely, since this alternative is much worse, in view of the loss of eurozone help and support and the threat of high inflation.”

The shekel, which rose 1.6% versus the dollar in January, has fallen 1.4% versus the greenback this month. The currency has advanced 6% versus the euro this year. The dollar closed Thursday at 3.80 shekels and the Euro closed at 5.12.

Israeli exporters, who have been suffering from the shekel’s strength against the dollar, have recently been getting worried about the local currency’s strength against the euro.

“As a result of a weak European currency, imports to Israel can be expected to grow – for example, in the car industry,” said Cukierman.

“Europe is a strong partner of Israel and therefore exports are affected. But the European market is still attractive in comparison to other markets because of its geographic accessibility.”

Looking ahead to opportunities for Israeli companies for investment and capital raising, Cukierman believes that the pan-European Euronext stock market is the best option.

“Euronext is the main market where Israeli companies can go, since as a pan-European market it offers greater diversification and higher exposure to investors,” said Cukierman. “We are not there yet, but we have a few candidates for public offerings once the market is ready.”

Cukierman & Co. Investment House has recently become the first Israeli company to become a listing sponsor on Euronext. Since 2005, there were more IPOs of Israeli companies on European stock exchanges than in the US. With 82 Israeli companies listed on European stock exchanges, Israel is ranked in first place in the number of foreign companies traded on these exchanges.

Cukierman & Co. Investment House is hosting the 8th Go4Europe conference next month in Tel Aviv, bringing together senior representatives of major European and Israeli companies as well as global stock exchanges to address current issues of raising funds and establishing strategic alliances in Europe.

“The growing attendance of participants at the conference year after year shows that Europeans are discovering Israel as a place for investment into hi-tech and other industries, moving away from a predominantly political picture of the country,” said Cukierman.     

    (Bloomberg contributed to this story)

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