Some members of Israel’s financial community are looking forward to the day — not far off, they believe — when the country will become a major center of global financial activity, The Jerusalem Post reports.
They point, among other things, to a survey released last week by Tzur Management that found that the number of hedge funds in Israel has increased by 50 percent from 2011 to 2013, and that assets under hedge-fund management have grown 15% annually, reaching $2.66 billion by December.
“It is our belief that this growth will continue and Israel will become a recognized center of global hedgefund activity over the next decade and beyond,” the survey predicted.
If the dream comes true, it would mean a new export sector, more employment, secondary employment effects, and a major new source of government revenue.
The already flourishing hi-tech sector could pave the way. It contains all the components relevant to big financial activity — above all, innovative thinking and entrepeneurial spirit.
In addition, regulatory changes over the last decade have helped promote financial services in Israel. In 2004, then finance minister Binyamin Netanyahu pushed through a law to retire the earmarked government bond by 2025, bringing $300 million to $400m. in new cash onto the market. The prospective sovereign-wealth fund to manage Israel’s natural-gas revenues could help to accelerate that trend.
“I don’t see any reason why Israel couldn’t be a major financial hub,” said Susquehanna Growth Equity’s Amir Goldman. “There’s a lot of knowledge transfer, with technology and financial-markets people coming to Israel. It’s slow but sure.”
But not everyone is so sure.
When the Post asked then Bank of Israel senior advisor Barry Topf last October about Israel’s potential as a financial hub, he wasn’t buying.
“As far as I know, every country in the world, from Grenada to Fiji to Trinidad and Tobago, has at one time or another decided that they want to become an international financial center,” he said. Israel lacks the specific conditions needed to make the transformation, he asserted.
“It would be very nice, but you just don’t have the conditions here — be they population, be they market size, be they geopolitical position — that you need to become an international financial center,” Topf said.