Last updated on 24 de March de 2023
Israel is one of the leading economies in the Middle East. For passive investors interested in investing in Israel, we analyze its 3 most important stock market indices.
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Introduction
Israel is a developed and prosperous country with an important technology sector. It is a Western country in the Middle East. This makes it one of the leading economies in the region.
Israel’s demographics are significantly better than those of Europe and the United States. In fact, its demographics resemble those of an emerging country. This makes the case for being long term bullish on Israel: its population it set to increase significantly in the decades to come, and so will the size of its economy.
Additionally, its public finances are in a very healthy state. The country’s budget is managed well and with a focus on the long-term success of its economy.
Israel’s currency is the Shekel (ILS), one of the strongest currencies over the past few decades. The country’s the most important stock exchange is in Tel Aviv.
In the following sections we analyze the 3 most important stock market indices in Israel:
TA-35 Index
The TA-35 index is the most important stock market index in Israel. It is composed of the 35 largest and most liquid companies listed on the Tel Aviv Stock Exchange.
Within the index, companies are weighted according to their market capitalization adjusted for free float.
The most dominant sectors are real estate, financial and technology. Although one of the most famous corporations in the index is the pharmaceutical Teva.
Until 2017, the TA-35 was known as TA-25 since it was composed of only 25 companies. However, 10 more companies were added with the aim of increasing its exposure to additional sectors and boosting its diversification.
If you want to find additional information about the TA-35, you can visit the website of the Tel Aviv Stock Exchange, owner of the index.
TA-125 Index
The TA-125 index is also very famous, since it includes the 125 companies with the largest capitalization of the Tel Aviv Stock Exchange.
In addition to the 35 companies in the TA-35, the TA-125 also includes the following 90 companies based on their size and liquidity. Therefore, the TA-125 is more diversified and exposed to a lot of small-cap stocks.
Because the Israeli tech scene is so important, the TA-125 index often includes a good number of technology stocks with a very promising future.
This index was introduced in 1992 under the name TA-100 because it only included 100 companies. In 2017, the number of constituents was increased to 125.
If you want to read additional information about the TA-125, here is the link to the TASE website.
MSCI Israel
Finally, the US company MSCI also calculates its own index for the Israeli stock market. It is the MSCI Israel, composed of those Israeli companies that can be found in the global MSCI World Index.
Because the criteria for inclusion in the MSCI Israel are the same as for the MSCI World, the exact number of stocks within the MSCI Israel fluctuates over time. This is mostly dependent on how many companies meet the market capitalization threshold.
Therefore, the number of stocks within the MSCI Israel is largely driven by the valuation level of the Israeli stock market index and the exchange rate between the Israeli Shekel and the US Dollar.
Most of the time the MSCI Israel has between 10 and 15 companies. As a result, it offers less diversification than the TA-35. Its exposure to the tech sector is very significant.
You can visit the MSCI website for more information.
I hope you found this brief analysis of Israel stock market indices useful. If so, I encourage you to subscribe to my newsletter:
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And if you want to learn about stock indices in another unique country, you can check out the following link:
Top 3 Brazil Stock Market Indexes
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