Israel: Tel Aviv Stock Exchange


Ringing the bell at the Tel Aviv Stock Exchange. (From left: Larry Lunt, Yossi Beinart, and John Lunt)

Israel may be small in geography and population, but its entrepreneurial culture creates opportunities for growth that are the envy of many larger countries.  My dad, Larry Lunt, and I had the opportunity to meet with Yossi Beinart, the CEO of the Tel Aviv Stock Exchange (TASE).  Mr. Beinart is a dynamic individual, with great vision for the future of Israeli financial markets.  He pointed out that according to some measures, Israel had the second most startup companies in the in the world, trailing only the United States.  Israel also has the most companies listed on NASDAQ of any country outside of North America.  TASE is very active in the ETF/ETN market, with nearly 200 Exchange Traded Products listed.  These products often account for about 1/3 of the trading.

The Tel Aviv Stock Exchange is the only exchange in Israel, and it has a market cap of approximately $220 billion.  The Israeli economy is dominated by service industries, and it is well known for its technology, healthcare, and defense industries.  Israel has a small industrial base—the average OECD country has approximately 25% in industry, while Israel has only 14%.

Despite producing world-class technology companies, Mr. Beinart lamented the fact that there are not more technology companies listed on the TASE.  The lack of listed technology companies in “Startup Nation” may seem surprising, but Mr. Beinart explained the reasons along with potential solutions.

While there is plenty of venture capital and seed investment money for startups, there is less money at the mezzanine stage as companies grow.  Also, successful smaller Israeli companies are often purchased by multi-nationals.  Others move because they want to be closer to their customers (the Israeli market is too small for a large company to have as its only market).

Mr. Beinart had innovative ideas on how to address these challenges.  First, TASE and Israeli financial regulators need to continue to make it easy to “dual list” their companies in New York and London.  Approximately 50 companies have already done this, and this accounts for about 1/3 of the exchange’s total market cap.  Mr. Beinart also talked at length about the exchanges strategy to provide services for startups and to act as the operational backbone for private companies that are providing liquidity events.  TASE has the systems that can clear the transaction.  You can read more about these ideas in this article found in the Haaretz newspaper:

Innovation is at the core of the Israeli economy and financial markets, and it seemed appropriate that the Tel Aviv Stock Exchange is helping to lead the way.  Geopolitical concerns seemed distant as we talked about opportunities for growth.  Perhaps it is because of its persistent geopolitical concerns that the Israeli economy creates interesting companies and technology—they are forced to protect, adapt, and innovate in a difficult part of the world.  I came away impressed with the potential of the Israeli economy, and the prospects for long-term growth in its financial markets.


Special thanks to Brennan Staheli, Jared Skidmore, and the Lunt Capital team for their contributions to this report.