A country in a semi-permanent state of war hardly sounds promising for investors. But Israel is worth a look. It has "transformed itself from a semi-socialist backwater into a high-tech superpower", as The Economist puts it.
An overdose of public spending and money printing in the early 1980s sent inflation rocketing to 950%. Politicians finally bit the bullet, slashing government spending, deregulating the economy and bolstering the central bank's independence. Sound management continued, with an emphasis on reining in spending, keeping inflation low and debts manageable. The state's share of the economy has dwindled from 56% in 1988 to 43% now.
An influx of Russian Jews in the early 1990s boosted the working-age population by 15%, says Jordan Weissman on Theatlantic.com, while a state-owned venture capital fund helped trigger a technology boom by encouraging foreign investors to create venture capital funds in Israel and promising to match part of their input.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The focus on survival has also spurred the development of advanced technologies, says Martin Spring in his On Target newsletter. Israeli "military technology is superb", notably in cyber warfare. Israel produces more high-tech start-ups relative to its population than any other country.
Meanwhile, thanks to a major discovery in 2009, Israel will soon be self-sufficient in natural gas. The economy "has become a formidable force".
Investors can gain access through some US-listed stocks. Among those worthy of further research, says Spring, are Teva Pharamaceuticals (TEVA); its rival Perrigo (PRGO); ClickSoftware Technologies (CKSW); Check Point Software (CHKP) and EZchip Semiconductor (EZCH).
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Somero: trading this overlooked bargainFeatures Mechanical-screed maker Somero dominates its niche and is attractively valued. Matthew Partridge picks the best way to trade it.
-
How to find big profits in small companiesCover Story The small- and micro-cap sectors are risky and volatile. But with careful research and patience, investors could make huge gains. Matthew Partridge explains how to find the market’s top tiddlers.
-
The hidden gems on Aim, London's junior marketFeatures Aim, London’s junior market, is risky – but you can find solid stocks at low prices. Scott Longley reports.
-
Is Aim finally coming of age?Features The Aim market of mostly smaller companies has traditionally been seen as a bit of a backwater. Is it time to change that view? Matthew Partridge talks to Paul Latham and Richard Power of fund management company Octopus.
-
Fetch! The Chinese small-cap stocks to buy in the Year of the DogOpinion Each week, a professional investor tells us where she’d put her money. This week: Tiffany Hsiao of Matthews Asia selects three Chinese small-cap stocks with exciting potential.
-
Small and mid-cap stocks with big potential
Opinion Professional investor Guy Anderson of the Mercantile Investment Trust selects three small and medium-sized firms with promising prospects that the market has missed.
-
Get cheap, reliable growth from smaller companiesFeatures One of the most reliable long-term investment trends is the long-term outperformance of smaller companies over blue chips. Max King picks some of the best ways to buy into this growth.
-
Big gains from small caps
Features In an environment of middling inflation and low interest rates, small-cap stocks tend to beat big blue-chips. John Stepek explains why, and how to invest in them.
