Stars of Wall Street.

Author:Album, Andrew
Position:Israeli high technology firms' shares being traded in the US

Over one hundred Israeli companies now have their shares traded in New York. Most of them are involved in high tech industries.

With the exception of Canada, Israel has more companies traded on the stock exchanges of New York than any other country. But the traffic is not just one way, as a whole host of US high tech heavyweights, such as Microsoft, IBM and Motorola continue to pour millions of dollars into investments in Israel.

"Some of the best technology on the planet is being fostered in Israel," enthuses Scott Kalb, a managing director at Salomon Smith Barney Capital Management in New York. Yaacov Yisraeli of the Israel America Chamber of Commerce agrees. "After Silicon Valley and Boston, Israel is the most important high tech area in the world," he says.

Many US giants have scrambled to build up a presence. "IBM placed one of its four global research centres in Israel; Microsoft installed its first research facility outside the US in Israel; Intel, which has been operating in Israel since 1972, created MMX technology in that country," says Harvey Shapiro, an American consultant who specialises in international finance.

In early May, the California-based high flier Cisco Systems became one of the latest arrivals, when it paid $50 million for internet company CLASS Data Systems. Before 1994, according to Cisco's Joseph Gal, it had never invested outside of North America. "The model of buying out companies had always existed, but only in North America. Yet there were interesting companies in Israel, so we decided to expand," he says.

The upsurge of venture capital activity has led to several leading US investment banks - such as Goldman Sachs, Lehman Brothers and Merrill Lynch - setting up operations in Tel Aviv. This has led to a further increase in the funds arriving. "Foreign direct investment has been rising sharply. It was well over $3 billion in 1997, that's up from around $100 million in 1991, and a lot of it is going into high tech," says Peter Plant of Salomon Smith Barney.

Experts attribute the remarkable explosion in Israel's high tech sector to several factors.

A major contributor has undoubtedly been the development of advanced military technologies by the Israeli army, in response to the threat posed by the country's Arab neighbours. The constant desire to maintain a qualitative edge has led to massive investment in this area and some have succeeded in taking this technology and developing it for civilian use. "In short...

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