MSCI is considering adding Israel to MSCI Europe Index and has published an online survey for this purpose
26 December 2021
MSCI, one of the largest index providers in the world, is re-considering the Regional Classification of Israel. In particular, MSCI is considering whether to regionally classify Israel as Europe, and accordingly, whether to add Israel to MSCI Europe Index. The regional classification of Israel depends, inter alia, on the feedback MSCI receives from the online survey which can be filled out through the link below.
Israel’s inclusion in the MSCI Europe Index is both important and consistent with other aspects of Israel’s regional classification, due to the following reasons (among other things):
1. Israel is considered part of Europe when it comes to membership in a large variety of financial organizations (e.g. IOSCO, IMF, FSB, FATF, etc.).
2. When examining a variety of economic parameters (GDP per capita; inflation; government debt; growth; etc.) Israel “behaves” like an average European country, and even outperforms in certain aspects.
3. The exclusion of Israel from Europe causes global investors to miss the benefits of the strong NIS, and, of course, the powerful Israeli high-tech sector.
4. The exclusion of Israel from the indices prevents many investors from investing in Israeli companies, even though they are interested in doing so (since their investment policy is limited to companies from countries included in the benchmark index).
5. Israel’s inclusion in the European indices will give them the exact sector they lack – technology shares, as well as some exposure to the strong Israeli currency.
6. Israel is responsible for about 8% of the number of “unicorns” in the world. European indices have a potential to benefit from the inclusion of Israel in the European indices, due to all of the Israeli “unicorns” that are expected to join the Israeli capital market.
See MSCI’s publication, including the presentation they posted regarding the consultation, (this is actually an online survey that can be filled out on MSCI’s site): >> click here
The consultation is open until the end of January 2022, and a decision is expected to be taken by the end of February 2022.
We welcome the efforts of the Israel Securities Authority and the Tel-Aviv Stock Exchange in this matter, and hope they will turn out to be fruitful. Thanks in advance for your cooperation.
Kind Regards,
Herzog Fox and Neeman
Capital Markets & Securities
kaczelnikd@herzoglaw.co.il
