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  • The rapid increase in surplus assets over liabilities vis-à-vis abroad continued during the third quarter (some $3 billion, 7 percent), reaching $46 billion at the end of September. Since the beginning of the year, the surplus has increased by about $12 billion.
  •  The value of Israeli residents' assets vis-à-vis abroad increased by about $6.8 billion (2.6 percent) in the third quarter of 2012, to $267 billion at the end of September. The increase was a result of both investments in equities abroad, and market price increases.
  • The balance of liabilities to abroad increased by about $3.8 billion (1.7 percent) during the third quarter of 2012, and reached about $221 billion at the end of September. The increase was due mainly to price increases on the Tel Aviv Stock Exchange (some 1.7 percent).
  • The surplus of assets over liabilities vis-à-vis abroad in debt instruments alone continued to increase in the third quarter of 2012, by about $4.4 billion (7.1 percent), and reached about $66 billion at the end of September (a negative net external debt).
  •  The continued decline in Israel's gross debt to abroad since mid-2011, as a result of makam redemptions by nonresidents, contributed to a sharp decline of some 6 percentage points in the gross foreign debt to GDP ratio, which reached 39.4 percent at the end of September.


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Israel's net assets abroad (the surplus of assets over liabilities) increased by about $3 billion (7 percent) in the third quarter of 2012, and was around $46 billion at the end of September. The increase in surplus assets in the portfolio derives from the increase in asset values due to price rises on markets abroad and the investment flow into foreign stocks and bonds. These were partially offset by the increase in value of liabilities to abroad. The balance of liabilities to abroad increased primarily through price increases on the domestic market, and direct investment in the economy by nonresidents.

 

For the year to date, the surplus assets over liabilities vis-à-vis abroad has increased by about $12 billion, a result of both the cumulative increase in the balance of assets and a concurrent decline in the balance of liabilities, primarily due to sales of government bonds and makam, and withdrawals of deposits in banks in Israel by nonresidents and foreign banks (Figure 1).

 

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The balance of Israel's assets abroad increased in the third quarter of 2012 by about $6.8 billion (2.6 percent), to reach about $267 billion at the end of September. For the year to date, the balance of assets increased by about $9.7 billion (3.8 percent).
The value of residents' stock portfolios abroad increased by about $3.7 billion (9.7 percent). About $1.9 billion derived from price increases on markets abroad, and there were net investments of about $1.6 billion, primarily by institutional investors. For the year to date, the value of the stock portfolio abroad increased by about $6 billion, of which $3.3 billion was due to price increases and about $2.6 billion from net investments abroad by Israelis.
There was a small amount of net investments in tradable bonds abroad in the third quarter.
In other investments, there were net deposits by the public with foreign banks abroad of about $0.5 billion (4 percent), which were offset by reductions of customer credit of a similar amount.  The increase in foreign currency balances of some $1.1 billion (1.5 percent) derived primarily from exchange rate differentials, and contributed as well to the increase in the value of assets.
In the composition of residents' securities portfolio abroad, in the third quarter of 2012 there was a 1.1 percent increase in the foreign shares component, with a decline in direct investment and other credit. Since the beginning of 2012, there has been an increase in the share of investment in foreign shares, primarily against a decline in the share of deposits at banks abroad.

 

 

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At the end of September 2012, direct investments constituted some 39 percent of the value of residents' securities portfolio abroad, with foreign bonds and other credit accounting for some 28 percent, stocks for some 22 percent and deposits for some 11 percent.

 

 

The balance of Israel's liabilities to abroad increased during the third quarter of 2012 by about $3.8 billion (1.7 percent), and reached $221 billion at the end of September. The increase in the balance of liabilities to abroad derived primarily from price increases of in nonresidents' stock portfolio in Israel ($2.9 billion) and from the flow of net direct investments of about $2.6 billion (3.7 percent). 

The increase was partly offset by foreign banks' withdrawals of about $1.1 billion (18.2 percent) from deposits in domestic banks, and by reduction of suppliers' credit at a similar amount.

Since the beginning of 2012, the economy's gross liabilities declined by about $2.2 billion, a combination of sales of makam and government bonds, and the continued trend of withdrawals by nonresidents and foreign banks from deposits in Israel; these were partly offset primarily by the flow of nonresidents' direct investment in the economy, which totaled $7.5 billion during the period.

 

The value of nonresidents' financial portfolio on the Tel Aviv Stock Exchange increased in the third quarter of 2012 by around $2.7 billion (11.5 percent), and at the end of September was $26.2 billion. Nonresidents' stock holdings increased by $1.5 billion, and reached $12.9 billion, primarily the result of higher prices, and the value of their bond holdings increased by $0.6 billion to reach $6.2 billion. Since the beginning of the year, the portfolio's value has declined by about $3.6 billion (Figure 4).

 

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The gross external debt

 

Israel's gross external debt declined by $2.5 billion (about 2.6 percent) in the third quarter of 2012, and at the end of September stood at about $92 billion. Most of the decline was the result of withdrawals from deposits in Israel by nonresidents and foreign banks, and reductions of suppliers' credit.

The ratio of external debt to GDP continued to decline in the third quarter, by another 2 percentage points, and at the end of September 2012 was 39.4 percent. The continued decline in Israel's gross debt to abroad, as a result of redemptions of makam by nonresidents, contributed, since the middle of 2011, to a sharp decline of some 6 percentage points in the gross external debt to GDP ratio.

 

 

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The net external debt
 
The surplus of assets over liabilities abroad in debt instruments alone increased by about $4.4 billion (7.1 percent) in the third quarter of 2012, and reached $66 billion (i.e., a negative net foreign debt) at the end of September.

 

The balance of short-term debt assets was $114 billion at the end of September 2012, a coverage ratio of 2.7 of short term debt.