Cellcom Israel

On late May 2010, MSCI a leading provider of investment tools for investors globally, including asset managers, banks, hedge funds and pension funds, announced the reclassification of its MSCI Israel Index to the MSCI World Index, coming from the Emerging Markets Index.

With that classification is expected that Israel Stocks attract more institutional investor since the MSCI International Equity Indices are the most widely used global benchmarks in the industry and a number of funds and ETF include MSCI indexes in their investing.

The process at MSCI to reclassify the Israel Stocks started in July 2008, with MSCI analyzing and verifying that Israel complied with the following among other criteria:

The country Gross national Income per capita is 25% above the World Bank high income threshold for three consecutive years.
High securities liquidity of 20% or more than the calculated annualized traded value ratio.
Market accessibility criteria rated very high in the following:
Openness to foreign ownership
Ease of capital inflows / outflows
Efficiency of the operational framework
Stability of institutional framework




It is no surprise then that Israel stocks are outperforming the market as you can see in this graph showing the relative strength of the Israel market represented by the iShares MSCI Israel Cap Invest Mkt Index (EIS), measured against the benchmark S&P 500.



I started to look for dual traded Israelis Stocks and decided on Cellcom Israel Ltd. (CEL), a matured more or less monopoly with a 10% plus dividend yield.

Cellcom shows strong relative strength against the EIS Benchmark, meaning that EIS is set to outperform the markets and CEL is in line to do better than the EIS index.




CEL is not far from its ideal entry point around 28, target is at 32 for a quick 10% gain, consider closing your position below 27.75 for a 5% loss, that is a 2:1 risk / reward ratio.








Disclosure: long cel