In the past few weeks, and more so in the past few days, a lively discussion is developing over large overseas investments by Israelis. The sums mentioned by the press vary, not surprisingly, depending on the source being quoted. Overseas cash transfers are legal under the liberalization laws instituted four years ago, so the official figures will ultimately appear in the Bank of Israel¿s reports.
More important is the question of just who is investing abroad. There are two groups of investors in this arena: institutional investors, such as insurance companies and provident funds; and private investors ¿ wealthy established households. Although mutual funds handle private investors¿ money, they are included in the institutional category.
Among the institutional investors there is no doubt that the insurance companies have lately been investing higher sums abroad than the provident funds. This is probably because supervision of the insurance industry is more liberal than restrictions governing provident funds.
There are also two main groups among private investors: one that operates via agents and local financial institutions such as Israeli mutual funds and banks, and another whose funds are managed via foreign organizations that operate in Israel or that have representation here.
In the final analysis there is no doubt that there has been a considerable rise in overall investments abroad, with an upsurge just recently. What has caused this sudden increase? It could be attributed to the security situation, though most analysts point to the sharp drop in interest rates last December that sparked the depreciation of the shekel, as the immediate cause. The latter explanation seems more logical because the security situation has been bad for some time and the big wave of investments began just recently.