Israel from the perspective of foreign investors
page 2 Are the foreign investors here? Saban-Apax-Arkin Cerberus Orascom Institutional Investors Capital Group Templeton Fidelity Boston Company Pioneer Investment management T Rowe Price Schroders
page 3 Level YTD (%) Commodities Oil (WTI) US$/b Gold spot price $/oz Copper 3M fwd $/mt 4, Yields EM $ Bond Yield EM Local Bond Yield Risks EMBI+ Spread (bp) EM Volatility VIX Currency movements vs the US$ $/ Euro Yen/ $ $/ Asia (MSCI) $/ EMEA (MSCI) $/ LatAm (MSCI) $/ EM Currency Fund Flows as a % of assets under management Equity Fund Flows into GEMs - 9.8% Bond Fund Flows into GEMs % Top down drivers of emerging markets
page 4 Flow of funds into emerging markets in 2005 (1)
page 5 Flow of funds into emerging markets in 2005 (2) –10% of flows into equity funds allocated to emerging markets in 2005 –17% of flows into bond funds allocated to emerging markets
page 6 Emerging vs developed market performance Israel vs emerging markets Emerging market bond yields
page 7 Valuations in emerging markets still lower, though gap closing
page 8 Israel in a global context PEEPS GrowthPBVROEDiv Yld Country05 (x)06 (x)05 $(%) 06 $(%) 05 (x)06 (x)05 $(%) 06 $(%) 06 (x) China %7% %22%4.3% India %13% %24%1.8% Indonesia 1294%33% %30%4.0% Korea %16% % 1.3% Malaysia %13% %16%3.8% Taiwan %17% %19%3.7% Thailand 11101%4% %20%4.7% Hungary %-7% %22%3.5% Israel %27% %19%4.8% Poland 11935%21% % 4.2% Russia 81146%-30% %16%2.1% South Africa 11 38%35% %28%3.3% Turkey %43% %19%1.4% Brazil 8777%22% %30%3.4% Chile %34% %12%0.3% Mexico %17% %27%0.5% ASIA %15% % 2.8% EMEA 12 34%17%2.4 22% 2.6% LATAM %21% %27%2.1% EM %17% % 2.6% US Japan Europe
page 9 Performance of MSCI Israel equity market in global context
page 10 Deutsche Bank’s recommended weighting versus benchmark index Foreign investors weighting versus benchmark index
page 11 Currency value as % of 2005 PPP fair value
page Day annualized Vol Equity5YRYTDCurrncy5YRYTD VolAvgchg (%) VolAvgchg (%) Israel ASIA EMEA LATAM EM US nm Japan Europe Y Beta5YR CurrentAvg Israel Turkey1.3 Argentina Brazil Chile Mexico ASIA EMEA LATAM EM1.0 Country and currency volatility Beta to emerging markets If we are not EM, what are we?
page 13 Key Deutsche Bank global forecasts Current level2006F US inflation (core PCE) %1.8%2.0% Fed Funds rate (YE) %4.3%5.0% US real GDP growth %3.7%4.0% China real GDP growth % 8.4% WTI US$/b end period6150 Copper 3M fwd $/mt end period4,3722,976 Gold price US$/oz end period Nickel US$/mt14,16512,566 $/ EUR end period Yen/ $ end period
page 14 Deutsche Bank’s Israel forecasts
page 15 What can we do next? Move to nominal reporting Increase liquidity Easy access to stock borrowing Standardize OTC documentation Netting Free float