Welcome!

News Feed Item

Israel's Economic Progress Threatened by Tactical and Structural -- and Solvable -- Liquidity Shortages, According to New Milken Institute Report

LOS ANGELES, CA -- (Marketwired) -- 03/18/14 -- In 2010, Israel graduated to developed country status in world stock indexes, a move that should have opened its markets to a large pool of global investors. Instead, there has been a decrease in foreign portfolio investment and an increase in local portfolio outflows. Israel's capital markets have suffered a decline in liquidity that threatens the country's economic security and growth. From 2008 to 2012, the average daily trading volume on the Tel-Aviv Stock Exchange (TASE) has dropped more than 50 percent, from NIS 2 billion to around NIS 800 million. TASE liquidity ranks a low 30th among exchange turnover ratios in international securities exchanges. This is according to a new report from the Milken Institute, "(Re)inventing Israel's Capital Markets: Financing the Transition from Startup Nation to Global Nation."

Also according to the report, the Israeli IPO market has collapsed, mostly due to high regulatory costs in the NASDAQ and TASE, leading to 95 percent of startups being sold to foreign entities. These conditions, a result of the failure to attract and retain portfolio investors from outside Israel and overconcentration on early-stage financing, put at risk the future of local capital investment and overall economic growth. The lack of late-stage financing, along with human capital constraints, is leading startups to premature exits through mergers and acquisitions. Knowledge-based firms and their exports, the heart of Israel's competitive advantage, require a longer financial runway for takeoff in transitioning into global companies.

"Without liquidity, Israel will not be able to transition from a startup to a scale-up nation or become a leader in new technologies whose global contributions also reap domestic rewards," observed Milken Institute Senior Fellow Glenn Yago. "While known for their R&D, Israel's startups have not been as successful commercializing the products and discoveries that would build more businesses, new sectors and secondary markets, and gain for Israel a greater share of the product value chain."

"(Re)inventing Israel's Capital Markets" comprises the discussions in a Financial Innovations Lab® -- a gathering of senior leaders in Israel's public and private sectors along with representatives of financial institutions and regulators -- convened by the Milken Institute in Los Angeles in May 2013. Participants explored ways to improve access to capital with an eye toward securing Israel's future as an innovation hub.

Lab participants came up with concrete solutions that Israel can enact now to reverse its liquidity crisis:

  • Increase transparency and accessibility to foreign investors, in part by creating new financial products, such as exchange traded funds and global benchmarks.
  • Remove regulatory, institutional, legal, tax, and market infrastructure requirements that impede the establishment of a financial services landscape supportive of new technologies, and modernize regulations for IPOs to lower transaction costs of public offerings.
  • Develop fixed-income products that support economic expansion in Israel's regions and new technologies.
  • Expand private equity through public markets with venture trusts and business development corporations for under-financed firms; and, especially, create late-stage technology venture funds.
  • Build a "technology bridge" to institutional investors for pre-IPO companies by bringing them into an institutional investor asset class, such as a non-exchange-traded, private-shares market.
  • Rebrand and re-launch the Tel-Aviv Stock Exchange as the Global Technology Securities Exchange through new financial products for global partnerships that solve challenges through technology applications in the emerging and frontier markets.

"The technology bridge we discussed in the Lab would give the most promising companies access to a global community of asset managers and to additional capital, beyond the traditional venture capital and private equity markets," Yago added. "These young companies would benefit from a longer runway before launching an IPO or being forced into an early merger or acquisition -- a move that most often ushers IP out of the country that funded its development."

The Lab concluded that the time has come to "reinvent" Israel's capital markets. Israel needs to put the mechanisms in place to finance the expansion of its high-tech companies and disruptive technologies so that they can become self-sustaining. Their success in commercializing technologies and products for export will strengthen economic security -- and will enable Israel to serve as a model for other countries seeking to emulate its rise as the first startup nation.

"To build a global nation, it is not enough to incubate startups. Companies must be able to 'scale up' as well," said Yago. "Without solving its capital gap, Israel's technological mojo will emigrate, undermining the base that could sustain a highly productive, high-employment society."

About the Milken Institute
A nonprofit, nonpartisan think tank, the Milken Institute believes in the power of capital markets to solve urgent social and economic challenges. Its mission is to improve lives around the world by advancing innovative economic and policy solutions that create jobs, widen access to capital and enhance health.

About Financial Innovations Labs®
Financial Innovations Labs® bring together researchers, policy makers, and business, financial, and professional practitioners to create market-based solutions to business and public policy challenges. Using real and simulated case studies, participants consider and design alternative capital structures and then apply appropriate financial technologies to them.

www.milkeninstitute.org
@milkeninstitute

Add to Digg Bookmark with del.icio.us Add to Newsvine

Contact
Conrad Kiechel
Director of Communications
+1-310-570-4668
ckiechel@milkeninstitute.org

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
The security needs of IoT environments require a strong, proven approach to maintain security, trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vic...
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @CloudExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
Security, data privacy, reliability and regulatory compliance are critical factors when evaluating whether to move business applications from in-house client hosted environments to a cloud platform. In her session at 18th Cloud Expo, Vandana Viswanathan, Associate Director at Cognizant, In this session, will provide an orientation to the five stages required to implement a cloud hosted solution validation strategy.
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
When you focus on a journey from up-close, you look at your own technical and cultural history and how you changed it for the benefit of the customer. This was our starting point: too many integration issues, 13 SWP days and very long cycles. It was evident that in this fast-paced industry we could no longer afford this reality. We needed something that would take us beyond reducing the development lifecycles, CI and Agile methodologies. We made a fundamental difference, even changed our culture...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smart...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, discussed the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports.
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settle...
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and Containers together help companies to achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of D...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).