Bank of Israel
Office of the Spokesperson, External Relations and Public Affairs
Press Release
December, 2011
Israel's International Investment Position (IIP), September 2011
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The value of Israeli residents' assets abroad fell by about $9.4 billion (about
3.5 percent) in the third quarter of 2011, to $257 billion. This was due mainly
to the drop in prices and the sale of tradable securities abroad.
The balance of liabilities to abroad decreased by about $18.6 billion (7.1
percent) in the third quarter of 2011, and reached about $241.7 billion at the
end of September. Most of the decline was due to the drop in share prices on
the Tel Aviv Stock Exchange (TASE) and to the effect of the 9.2 percent
depreciation of the shekel on the dollar value of the portfolio.
The considerably greater decline in the balance of liabilities than in the
balance of assets resulted in a marked increase of $9.2 billion in the surplus of
assets over liabilities vis-à-vis abroad, continuing the upward trend evident
since the beginning of 2011.
The surplus of assets over liabilities in debt instruments alone vis-à-vis abroad
fell in the third quarter of 2011 by about $1.6 billion, and reached about $58.7
billion at the end of September (a negative net external balance).
The value of nonresidents' portfolio on the TASE declined in the third quarter
of 2011 by about $7.1 billion. In the last two years the composition of
nonresidents' financial holdings on the TASE has changed considerably, with
a significant increase in their holdings of local currency bonds and makam
together with a drop in the value of their financial equity holdings and the
proportion of the latter in the portfolio.
POB 780 Jerusalem 91007 Israel
Tel: 972-2-6552712/3 Fax: 972-2-6528812 www.bankisrael.gov.il
Balance of assets and liabilities
Israel's net assets abroad (the surplus of assets over liabilities) increased in the third
quarter of 2011 by about $9.2 billion. Since the beginning of 2011 Israel has had a net
surplus of assets, following a continuous decline in net liabilities that started in the
second half of 2000 (Figure 1).
Figure 1: The balance of Israel's liabilities abroad
1998-2011, $ billion
70
60
50
40
30
20
10
0
-10
Q
1
1
Q 99
3 8
1
Q 99
1 8
1
Q 99
3 9
1
Q 99
1 9
2
Q 00
3 0
2
Q 00
1 0
2
Q 00
3 1
2
Q 00
1 1
2
Q 00
3 2
2
Q 00
1 2
2
Q 00
3 3
2
Q 00
1 3
2
Q 00
3 4
2
Q 00
1 4
2
Q 00
3 5
2
Q 00
1 5
2
Q 00
3 6
2
Q 00
1 6
2
Q 00
3 7
2
Q 00
1 7
2
Q 00
3 8
2
Q 00
1 8
2
Q 00
3 9
2
Q 00
1 9
2
Q 01
3 0
2
Q 01
1 0
2
Q 01
3 1
20
11
-20
2
The balance of Israel's assets abroad fell in the third quarter of 2011 by about $9.4
billion (about 3.5 percent), to $257 billion.
The decline derived mainly from a drop in prices and from sales of tradable securities
abroad: prices of foreign shares dropped by about $5.6 billion, and Israelis sold about
$1.7 billion of foreign bonds as their prices fell. Also contributing to the decline in the
value of the portfolio was the contraction of suppliers' credit, and the effect of
exchange rate differentials (a drop of $3.5 billion) on the dollar value of the portfolio.
The fall in its value led to a change in the composition of residents' securities
portfolio abroad. The proportion of investment in shares and bonds fell by an average
of 1.5 percentage points, with a concomitant increase in the share of direct investments
and bank deposits.
Figure 2: The Value of the Public's Asset Portfolio Abroad
($ billion)
200
180
160
140
120
100
80
60
40
20
Bank deposits
Credit and other
Tradable bonds
Equities
11
20
10
Q
3
20
10
Q
4
20
09
1
Q
Q
2
20
08
07
Q
3
20
07
20
Q
4
20
06
Q
1
20
05
Q
2
20
04
3
Q
Q
4
20
04
03
Q
1
20
02
Q
2
20
01
20
Q
Q
3
20
01
Direct investment abroad
4
20
00
1
Q
Q
2
20
99
98
19
Q
3
19
4
Q
Q
1
19
98
0
* Excluding Reserve assets
The balance of Israel's liabilities to abroad decreased in the third quarter of 2011 by
about $18.6 billion (7.1 percent), and reached $241.7 billion at the end of September.
Most of the drop came from the fall in prices on the Israeli market.
The flow of net sales of shares totaled $1.5 billion in the third quarter, a combination
of net sales of about $1.8 billion of Israeli shares abroad that was partly offset by net
investments of $300 million in the TASE. The $12 billion fall in prices of Israeli shares
also contributed to the steep decline in the value of the share portfolio.
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The balance of the investment in bonds decreased in the third quarter by $1.3 billion,
most of which ($1.1 billion) was due to the effect of the depreciation of the shekel on
the dollar value of the portfolio. The net investment flow was sales of $200 million––
sales of $3.4 billion of makam on the one hand, and investment of $3.1 billion in
government bonds in Israel on the other. In addition there was net investment of $160
million in corporate bonds and government bonds abroad.
Nonresidents’ net direct investments in Israel totaled $2.3 billion in the third quarter
of 2011, $890 million of which was an increase in non-distributed profit that was
reinvested, which was partly offset by a decline of $1.7 billion in the price of the
investments, and a fall of $800 million due to exchange rate differentials.
The value of nonresidents' financial portfolio on the Tel Aviv Stock Exchange fell
in the third quarter of 2011 by some $7 billion, and at the end of September was $37.6
billion.
In the last two years the composition of nonresidents' financial holdings on the
TASE has changed considerably, with a significant increase in their holdings of bonds
and makam: at the end of October nonresidents' holdings of bonds, $14.5 billion,
exceeded their holding of financial securities ($13.5 billion). For comparison, at the
end of 2009 nonresidents' holdings of financial securities on the TASE totaled $16
billion, while their holdings of local currency bonds and makam totaled only $3.5
billion.
50
45
40
Figure 3: Nonresidents' Securities Holdings on the Tel Aviv
Stock Exchange
Bonds
Equity and mutual funds (portfolio)
Equity (direct investment)
30
25
20
15
10
5
/2
0
06 06
/2
0
12 06
/2
0
06 06
/2
0
12 07
/2
0
06 07
/2
0
12 08
/2
0
02 08
/2
0
04 09
/2
0
06 09
/2
0
08 09
/2
0
10 09
/2
0
12 09
/2
0
02 09
/2
0
04 10
/2
0
06 10
/2
0
08 10
/2
0
10 10
/2
0
12 10
/2
0
02 10
/2
0
04 11
/2
0
06 11
/2
01
1
0
01
$ billion
35
4
The external debt
Israel's gross external debt fell by $3 billion in the third quarter of 2011, and at the
end of September stood at about $109 billion. Most of the decrease was the result of a
decline of $400 million in nonresidents' bank deposits and in the value of the bond
portfolio most of which was due to the effect of the depreciation of the shekel on the
amount of the debt in dollars.
The external-debt/GDP ratio at the end of September 2011 was 47.8 percent, a
reduction of 2.4 percentage points from the ratio at the end of June.
The net external net
The surplus of assets over liabilities abroad in debt instruments alone contracted by
about $1.6 billion in the third quarter of 2011, and reached $58.7 billion (i.e., a
negative net foreign debt).
The balance of short-term debt assets was $121.2 billion at the end of September
2011, a coverage ratio of 2.2.
Figure 4: Net* External Debt
$ billion, net lending to abroad (-)
20
10
0
-10
-20
-30
-40
-50
-60
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Q
2
20
09
Q
3
20
09
Q
4
20
09
Q
1
20
10
Q
2
20
10
Q
3
20
10
Q
4
20
10
Q
1
20
11
Q
2
20
11
-70
*External debt minus assets abroad in debt instruments (i.e., excluding equity).
For the complete data file, click here:
http://www.bankisrael.gov.il/deptdata/pik_mth/pikmth_e.htm
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