The balance of assets owned by Israelis abroad increased by nearly 7 percent to $172 billion in the first half of this year from the end of the 2006, while Israel's external liabilities rose 11% to $194b., the Bank of Israel reported on Tuesday.
"The most notable features on the assets side were the rise in business sector deposits abroad, which took place against the background of a widening negative interest rate gap and the increase in direct and portfolio investments abroad, reflecting continued portfolio adjustments in the private non-banking sector following the tax reform," the Bank of Israel report stated.
According to the central bank's Foreign Exchange Activity Department, the balance of direct investments grew by a significant $3.6b. during the first half of 2007 compared with an annual average of $3.7b. in the 1999-2006 period.
Lively activity in shares and bonds abroad during the reported period increased the balance of portfolio investments by about $4.9b., according to the report.
The business sector deposited a total of $2b. in deposits abroad, while the banks withdrew $0.7b. from their deposits abroad, to provide collateral against credit from the Bank of Israel, following a long period when banks placed deposits abroad as a result of their foreign-currency surplus.
At the same time the balance of Israel's external liabilities saw a rise of some $19b. to a total of about $194b. at the end of June 2007 compared to the end of 2006.
The positive trend in direct investments continued, with non-residents investing $3.7b. in the first half of 2007. The balance of non-residents' portfolio investment rose by about $13b., most of which ($9.7b.) was due to the sharp rise in Israeli share prices during the first half of 2007, with another $1.4b. deriving from purchases of Israeli shares on the Tel Aviv Stock Exchange and abroad, mostly in the first quarter of the year Israel's net balance of external liabilities - which is calculated by subtracting the total Israeli assets abroad from the balance of non-residents' assets in Israel - expanded by some $8b. to a total of about $22b. at the end of June 2007.