Road to Israeli Reforms Paved With Gold

2005 was definitely a good year for emerging markets. Thanks to strong economic growth and low inflation rates, countries such as Hungary, Slovakia, South Africa, Chile and many more won incredible amounts of foreign investments from hedge funds and pension funds looking for fresh alternatives to grow their money.

Israel was no different. A combination of low interest rates, minimal inflation and spectacular growth in corporate earnings, coupled with extensive regulatory reforms in its capital market, attracted $10 billion in foreign investments in 2005.

Perhaps the most dramatic turning point was the reform in Israel's pension fund regulation, a move that undoubtedly will have significant long-term effects on its entire capital market. ...