Israeli stock market is top performer despite regional threats

As detailed in previous articles, Israeli stocks such as Cellcom (CEL, quote), Ituron Location and Control (ITRN, quote) and Partner Communications (PTNR, quote) are very attractive, particularly for the high dividend yields. 

This was recently covered in an Bloomberg Businessweek article about the Tel Aviv Tav-25, which points out that despite the constant threat of war, Israel has produced better risk adjusted returns than all other developed stock markets in the past decade.

The threats have given the Israelis a competitive edge.  Outnumbered, Israel has to have a very highly educated populace — the second most educated populace in the OECD.  From this, it produces a great variety of high technology companies. 

As there is compulsory military service, many of these companies are in the communications sector.  The discipline from the armed forces contributes to success in the business sector and its forms self confidence and a work ethic.  Soldiers know how to perform in units and achieve goals working together. 

Many come from around the world to serve and live in Israel.  That breeds entrepreneurs and develops an export oriented economy.  Exports make up about 47% of the Israeli economy, contributing greatly to the success of the Tel-Aviv TA-25 and the companies within it.

Investors looking for a broad exposure to Israeli stocks should also check out the iShares MSCI Israel Capped Index (EIS, quote).