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Japanese investment in Israel H12023

Press release

Japanese investment in Israel accounts for 17% of all foreign investment in Israel, compared with 12.8% of foreign investment in 2022

A 20% decrease in the first half of 2023 compared to the same period in 2022.

Japanese investments in Israel totaled $469 million in the first half compared to $586 million in the same period last year, a decline of 20%.

Considering the moderate decline compared to the decline in all investments, Japan’s share of foreign investment basket rose to a record 17%, up from 12.8% in 2022.  And even higher than the peak of 2021 (15.8%)

The number of Japanese investments remained stable compared to the same period last year.  This year, Harel-Hertz accounted for 34 Japanese investments compared to 38 in the first half of 2022 and 68 investments in about 2022.

According to a study conducted by the Harel-Hertz Investment House.  The decline in investment is due to the following reasons:

1.   The war in Ukraine and with it, the price of raw materials increased sharply.

2.   Tensions in the West Pacific consolidated efforts and resources in Japan.

3.   The dramatic devaluation of the YEN against the major currencies in general and against the dollar in particular – a devaluation of about 43% during 2022-3 – reduced motivation for overseas investment and encouraged an increase in domestic investment in Japan.

4.   The increase in Global interest rates

5.   The lack of clarity in the face of the legal legislation crisis in Israel and its immediate impact on the high-tech environment.

Of the 34 investments, half of them are initial investments in new investment companies.

This year, one Israeli company was   acquired by a Japanese company (OXIDE, which acquired the Israeli company RAICOL).

Another characteristic of Japanese investment is the prominent component of strategic investments.  About half of the investments were made by industrial companies seeking to develop shared technologies and achieve future advantages over their competitors with the help of Israeli entrepreneurship.

In contrast, the Japanese financial funds have lost weight, They greatly reduced their overseas activities and focused mainly, on local-domestic investments.

The presence of Japanese institutional investors in Israel increased interest in Fintech and INSURTECH, which account for 12% of the total investment.

The activity of the Japanese-Israeli funds is particularly impressive, almost all of the funds raised new funds or set up follow-up funds (Sumitomo, Marubeni, Corundom), the most prominent of  which is LIQUIDITY CAPITAL, which raised investments in continuation of the funds it manages. But since the activity of this fund is not necessarily in Israel (US, Gulf States, Singapore) We could not fully include this in the local statistics.

 

Harel-Hertz expects investment recovery in the coming year, mainly in light of the initial and significant interest in Israeli security technology.  Cooperation in this field will be a step up in bilateral relations and investments will be directed to mature industries (and not just start-ups), and therefore to investments in large amounts and long-term collaborations.

Another development that may accelerate investment and economic cooperation is the mutual willingness to enter into discussions about a free trade agreement and upgrade the double taxation treaty.

 

For more details, you can contact:

אלחנן הראל 0544-577524

 

 

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