Graphs & Data- During the second quarter of 2014 the value of the public's financial assets portfolio increased by about NIS 30 billion, an increase of about 0.5 percent in real terms, and reached about NIS 3.05 trillion at the end of June.
- The growth during the quarter derived mainly from an increase in the balance of government bonds and makam (about NIS 34 billion, 4.5 percent) and in the tradable portfolio abroad (NIS 11.7 billion, 3 percent), mainly due to a net inflow of investments by institutional investors. The increase was partially offset by a decline in share prices on the Tel Aviv Stock Exchange and by a strengthening of the shekel vis-à-vis the dollar.
- As a result of the above developments, the share of tradable assets in the portfolio increased by 0.9 percentage points during the second quarter, and by 0.7 percentage points in the share of foreign assets.
- There was a net accumulation of about NIS 11.8 billion (4.8 percent) in the section of the portfolio managed through mutual funds during the second quarter, mainly in mutual funds specializing in CPI-indexed corporate bonds. Preliminary data for July indicate net redemptions in these funds.
1. The total assets portfolio
During the second quarter of 2014, the value of the public’s financial assets portfolio increased by about NIS 30 billion, an increase of about 0.5 percent in real terms, and reached about NIS 3.05 trillion at the end of March.
The increase in the second quarter was due primarily to an increase in the balance of government bonds and makam by about NIS 34 billion (4.5 percent). In addition, there was an increase of about NIS 10 billion (2.6 percent) in the value of the tradable assets portfolio abroad. This increase was partially offset by price declines on the Tel Aviv Stock Exchange and by the strengthening of the shekel by 1.4 percent vis-à-vis the dollar.
Since the middle of 2013, the pace of growth in the value of the public’s assets portfolio has exceeded the pace of GDP growth, contrary to the trend in 2011–2012, mainly due to price developments on stock markets in Israel and abroad. At the end of June 2014, the public’s financial assets portfolio was worth about 290% of GDP.
As a result of the growth in the value of the public’s securities portfolio abroad, in the second quarter of 2014 there was an increase of about 0.9 percentage points in the share of tradable assets in Israel and abroad, and 0.7 percentage points in the share of foreign assets.
2. The securities portfolio, by main components
Shares in Israel
During the second quarter of 2014, the balance of shares held in Tel Aviv by the public declined by about NIS 8.4 billion (1.6 percent), to about NIS 504 billion at the end of June. This decline was due mainly to the effect of price changes of Tel Aviv Stock Exchange-traded shares (1.5 percent). The decline was contrary to the increase of about NIS 100 billion in the value of the shares portfolio in Tel Aviv in the past three quarters.
Bonds
During the second quarter of 2014, the value of negotiable corporate bonds in the portfolio increased by about NIS 1.8 billion (0.7 percent), and reached about NIS 266 billion at the end of June, mainly net investments, following net repayments of about NIS 4.3 billion in the first quarter of 2014. At the same time, there was an increase of about NIS 34 billion 0in the balance of the government bonds and makam portfolio, mainly by institutional investors.
The assets portfolio abroad
During the second quarter of 2014, the value of the portfolio held abroad by Israelis increased by about NIS 11.7 billion (3 percent), and reached about NIS 400 billion at the end of June. The value of the tradable bonds portfolio abroad increased by about NIS 6.4 billion (4.7 percent), and reached about NIS 143 billion at the end of June. In parallel, the value of shares held abroad increased by about NIS 5.8 billion (2.5 percent), and reached about NIS 234 billion at the end of June. This was mainly comprised of net investments abroad by institutional investors and households. The increase in these components was partially offset by the appreciation of the shekel against the dollar (1.4 percent) in the second quarter, which decreased the shekel value of the portfolio, in parallel with a decline in the accumulation of deposits at banks abroad (1.9 percent).
3. Mutual funds
The value of the portfolio managed by Israeli mutual funds was NIS 261 billion at the end of June, about 8.6 percent of the public's total asset portfolio and about 15.6 percent of the tradable portfolio.
In the second quarter of 2014, the value of mutual fund assets increased by about NIS 12.7 billion (5.1 percent)—of which about NIS 11.8 billion was due to net accumulations (surplus of issues over redemptions, minus dividends), and the rest was due to price increases in the markets.
A breakdown of mutual funds by specialization shows that net accumulations in the second quarter were concentrated in “other” bonds, mainly CPI-indexed corporate bonds (about NIS 7.3 billion or 7.7 percent), and in State bonds (about NIS 4.9 billion, 13.3 percent). In contrast, there were net redemptions in money market funds (about NIS 1.2 billion, 2.1 percent).
We note that, as of the end of June, the trend of accumulation of corporate bonds has been halted. Preliminary data for July indicate net redemptions totaling about NIS 2 billion in mutual funds specializing in CPI-indexed corporate bonds.
* Further information on the public's assets portfolio can be seen on the Bank of Israel's website www.bankisrael.gov.il.