Summary:
The value of the public's portfolio of financial assets rose by 10.7 percent in nominal terms during 2004 and reached a total of NIS 1,512.5 billion (Table 3.1) following an increase of 12.2 percent in 2003. The increase in the value of the portfolio in 2004 encompassed all assets, although the main contribution came from the share component (shares in Israel and abroad) whose value grew by 29.8 percent. The main factors that led to the rise in the value of shares in Israel during 2004 were the upsurge in real activity and the relatively calm security situation. As a result of the increase in the value of shares in Israel and abroad, the proportion of the share component of the asset portfolio was the highest since 2001, at a quarter of the value of the portfolio.
The value of the portfolio excluding shares rose by 5.6 percent in 2004 compared with an increase of 4.6 percent in 2003.
The size and the composition of the asset portfolio in 2004 was mainly affected by the following factors: the low inflation prevailing during the year and the expectations of price stability in the future, the continued implementation of the reforms in the capital market, and a restrictive fiscal policy that was reflected by a low level of government borrowing.
An examination of the asset portfolio excluding the share component shows that the multi-year trends in the indexation composition of the portfolio continued: a decrease in the proportion of CPI-indexed assets concurrent with an increase in the proportion of unindexed assets and foreign-currency assets.
Chapter 3: The Public's Financial Assets Portfolio - PDF file