The investors in small and
medium-sized Israeli high-tech
firms range from nimble traders
like George Soros to institutions
like Bankers Trust Co, and some-
times their returns are the stuff
of legends. According to Business
Week (which ran a cover story last
August that was a paean to Is-
raeli high-tech industries), Soros'
1993 investment of $40 million
in Indigo (a high-tech printing
company) is worth more than
$500 million today.
Yet coups of this kind are only
one form of investment in at-
tractive Israeli companies. Fully
62 of them, for example, are list-
ed on American stock exchanges,
57 being high-tech firms.
"Foreign investment seeks op-
portunities in the Israeli market
for two reasons," explains Dr.
Baudot-Trajtenberg. "One is to
ride the consumer boom -- wit-
ness the penetration of major
chains from McDonalds and Piz-
za Hut to Ace and Toys R Us. The
other is to tap production poten-
tial, and here there is a particu-
larly strong interest in high-tech
companies."
Israel also is becoming a tar-
get for financial investments: cap-
ital placed directly in the stock
and bond markets or invested
through mutual funds. "Seven
mutual funds have been created
specially for investment in Israel
by brokerage houses abroad," Dr.
9 6
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Israel's economy has
seen a remarkable
rise of 70 percent in
real foreign
investment over the
last year alone.
Baudot-Trajtenberg reports, "and
last March Israel was included
in Morgan Stanley's world index
of emerging markets, so that
many pension funds will now be
taking a closer look at its poten-
tial."
Another indicator of the chang-
ing financial climate is that in-
vestment banks and brokerage
firms such as Lehman Brothers,
Goldman Sachs, and Salomon
Brothers have opened branches
or offices in Israel.
Some Japanese conglomerates
recently also have bought into Is-
raeli companies, keeping this qui-
et so as not to publicly irritate
some of their Arab partners, Dr.
Baudot-Trajtenberg reveals. But
what finally has made Israel a
magnet for savvy foreign invest-
ment is a combination of factors,
the promise of stability offered by
peace only the latest in that
list.
The Israeli economy's gradual
MIDDLE EAST page 68
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