Barclays Capital prefers Israeli high-tech shares in view of short-term fluctuations in the markets caused by geopolitical uncertainty. Barclays high-tech stock picks are Amdocs Ltd. (NYSE: DOX), Ceva Inc. (Nasdaq:CEVA); LSE:CVA), EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH), Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX), and NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE), which it calls "safer investments in times of uncertainty".
Barclays top two stock picks on the TASE are Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and Israel Chemicals Ltd. (TASE: ICL), saying "We are buyers of Israel Chemicals and Bezeq on significant geopolitical 'event driven' weaknesses."
Barclays cautions, "The main risk to Israeli equities would be a drawn-out military conflict with the Palestinian Authority. This is a scenario that Israel will want to avoid at all costs for obvious reasons. The threat of widespread boycott of Israeli products is one to be considered, but is not something that we view as highly likely or productive as the persuasiveness of Israeli technology and products make a 'true' boycott almost unfeasible."
Barclays adds that the S&P upgrade of Israel's foreign exchange rating to A+ "is warranted, in view of the improved economic fundamentals since the previous upgrade in 2007. "The 2008-09 recession aside, government debt continues to fall, and a commitment to lowering the deficit was reaffirmed with passage of a fiscal responsibility law. Inflation remains in a reasonable range and growth is proving resilient."
Barclays reiterated all its sector recommendations for Israeli shares: "Positive" for chemicals and food, "Neutral" for banks, oil and gas exploration, power and utilities, and technology, and "Negative" for telecommunications services.
Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2011
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