Many of the world's developed markets have struggled to return to solid levels of growth and have been weighed down by large budget deficits and high levels of unemployment. Because of this, many stock markets remain well below their 2008 lows, even when factoring in the large run-up in share prices over the past two months. Yet a few countries have managed to return to their pre-crash levels relatively quickly, including the dynamic Israeli economy, which has seen its fortunes boosted in recent months thanks to the discovery of a large gas field off of its coast in the Mediterranean. In fact, the Israeli Finance Minister recently said that the find could be worth "hundreds of billions of dollars," and some are projecting that the fields could help to double the surplus in the nation's current accounts balance.
Besides this massive find in gas reserves, the Israeli economy has been humming along thanks to solid growth in the technology industry and improving fortunes for the country's largest company, TEVA Pharmaceuticals
TEVA is expected to post robust earnings for its most recent quarter with profits of $1.27 a share on revenues of $4.4 billion. Both of these numbers, if confirmed in today's report, represent massive increases in year-over-year terms for the company; a 29.9% EPS growth and revenue growth of 23.1%. Of particular interest to investors should be a preliminary report on ratiopharm, Germany's second largest generics producer which TEVA acquired earlier this year in order to beef up its business in Europe and become a larger player in the area. "Increasing Teva's market share in Europe -- a geography with tremendous potential for generics penetration -- is an important pillar of our long-term growth strategy. With the acquisition of ratiopharm, we will become the leader in key European markets and we are well-positioned to become the leader in many other European markets in the near future," said Teva's president and CEO Shlomo Yanai, suggesting that the nearly $5 billion dollar purchase by the Israeli giant is an important acquisition by the firm, and that Europe will play a crucial role in their long-term growth strategy. Any information regarding this is likely to weigh heavily on the stock [see Three Country ETFs Ripe With Risk].
Because of this earnings report, we have decided to make the iShares MSCI Israel Capped Investable Market Index Fund
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