Merril Lynch: 'Pick Israel to avoid global slowdown'

Company says it is a big believer in local real estate.

October 17, 2006 08:35
1 minute read.
shekel 88

shekel 88. (photo credit: )


Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analysis from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief


Anticipating the US economic slowdown will continue to burden international markets, Merrill Lynch on Monday recommended that investors "park their money in Israel" by year-end to protect themselves from what is expected to be another round of emerging-market volatility. Israel, the firm's analysts noted, tended to underperform emerging markets during an uptick in economic growth but outperform in times of economic sluggishness. Investing in Israel, Merrill believes, will yield profits between now and the end of 2006, as well as provide somewhat of a shield from any emerging-market volatility. It cautioned, however, that because Israel was an open, export-oriented economy, it could not escape lower US growth entirely. "From 2007, investors should go domestic and look for names that benefit from increased domestic demand and which are less exposed to the US. Consumer spending is the name of the game," analysts at the world's largest brokerage told clients. "Those companies that we believe will benefit from stronger consumer trends and looser monetary policy in Israel, as well as their limited exposure to the global economy, include Bezeq, Partner and Bank Hapoalim," Merrill said. Although the firm thinks the retail chains should be prime candidates to benefit from a stronger consumer, it said their valuations were still too high, with both Blue Square and Supersol trading at a price-to-earnings ratio of 17.5 times consensus analyst estimates for 2007. Also on Merrill's recommended list is Israel Chemicals, even though the firm expects that the strong shekel and higher transportation costs could pressure margins. Meanwhile, the broker noted, Ormat's fundamentals remained intact and much of the pressure likely was off the company with oil prices looking to have stabilized. It recommended increasing positions in the company. But Merrill is especially bullish on the country's real estate sector, despite it being highly illiquid. "We believe investors could do worse than invest in actual bricks and mortar," the firm said, noting its strong support for the fundamentals of the sector. "We think the macroeconomic environment can only support its growth. Lower interest rates, stronger consumer spending and, most of all, the tight housing supply should boost the sector, especially on the residential side."

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection


Cookie Settings