Interview: Ester Levanon
Ester Levanon, 64, has been chief executive officer of the Tel Aviv Stock Exchange since 2006. She has helped secure for the exchange (for publicly traded companies) the coveted “developed-market” status extended by global economic bodies. Trained in mathematics at the Hebrew University of Jerusalem, she also studied at the Harvard Business School. Prior to joining the TASE in 1986, she established and directed the computer system of the Shin Bet, Israel’s security agency.
Q. By most accounts, Israel’s economy is faring well amid a global economic slump. How does Israel manage this?
A. One reason we have done relatively well is our concentration in high technology. Another vital reason is Stanley Fischer, the Bank of Israel governor, who seems to know exactly what to do at the right time. He has steered us clear from making grave mistakes. I think Israel was the only country in the world, at least in the Western world, that had a positive growth in 2009. I’m not going to say that it’s the genius of the Israeli system, but it’s hard work and knowing that we need clear, steady hands on the helm.
Q. What are you most bullish about in Israel’s economy?
A. The tech industry [is] not only high tech, it’s biotech, clean tech, it’s electronics, optics, the entire amazing gamut. If you look at the high-tech community in the broadest sense of the word, we are leading worldwide.
Q. How is the TASE different than every other stock exchange in the world?
A. The TASE plays a role in the Israeli economy that is vastly disproportionate to the size of our country. Israel was promoted to [MSCI], the top organization of developed markets, this past May and now we are part of the developed-market index [rather than the emerging-market index]. There are 23 countries in this category, and there is a mini-index that excludes the giants U.S. and Canada for statistical reasons in some instances. Israel represents 0.9 percent of this whole, while Greece, Portugal and Ireland are each 0.3 percent, so those three markets together equal ours. Italy, a relative giant, is 2.8 percent, only three times Israel. [In 62] years, Israel has become a full-fledged developed market. China is a few thousand years old and is not yet a developed market. Massive Egypt has a much smaller exchange than we do, and insofar as Europe is concerned, we are, I think, number six in terms of volume. Beyond stocks, the TASE also trades government bonds, derivatives and options.
Q. If you had to pick one classic Israeli corporate success story, what comes to mind?
A. The pharmaceutical giant Teva, but Teva is an international story, not just an Israeli one. Israel Chemicals is a nice story to point to with pride. It is one of those companies that was held by the government but was privatized in the early ’90s. Today, they are one of the leading chemical export companies in the world [and] they are listed solely on the TASE.
Q. What is your vision for taking the TASE further, faster?
A. I have one idea that for the moment I call IsraTech. We are aiming to make Israel a center for high-tech companies. It doesn’t mean that we are going to compete with NASDAQ, but there is a well-defined sector of high-tech companies that are too small and too young to be listed on NASDAQ. It might be too expensive for them or they might not be interested in the U.S. market. I want to enable them to leverage the solid brand name of Israel as a center for high-tech company offerings and trades. There is a problem in the last few years of how to raise money for these companies, with venture capital funds pulling back considerably almost everywhere. The Tel Aviv Stock Exchange could be the answer for those companies.
Q. So this would be a viable alternative for smaller firms that cannot or will not go the NASDAQ route?
A. It’s very difficult for a high-tech company to list on NASDAQ—the yearly maintenance of a company listed is about 10 times what it costs in Israel. So we are trying to use this window of opportunity to set up a cluster for high-tech companies. Already, we have dozens of high-tech and biomed companies in our ranks. We have the critical mass especially for biomed in terms of a number of companies, which is higher, I think, than all of the European exchanges. It has come to the point where there is one American biomed company that is not listed anywhere and they want to list first on the TASE.
Q. Do you foresee a trend away from Israeli companies if the TASE becomes more of a global clearinghouse?
A. Israel is the center for high-tech companies, and Israel’s stock exchange should be the center for those companies. To have a critical mass you have to start somewhere, and the easiest and most natural place to start is with the Israeli companies. But I emphasize the word “start,” since from there we can grow and expand. More and more companies are discovering the best way to find investment capital is to go public on the Israeli exchange. They are able to raise what they need, and it’s better than venture capital money, which has almost dried up. Israel can be a real solution for them.
Q. Does the government encourage companies to list on the TASE, or does it remain neutral?
A. The treasury spoke about providing tax benefits for IPOs or high-tech companies that list on the TASE. It’s not in effect yet, but we hope it will be. They are very supportive, either because they are involved or because they believe in the high-tech community or, most likely, because they are Zionist. All of these are good, legitimate reasons. Within three years, we want it known all over the world that if you want to invest in a high-tech company, come to the TASE. If you speak with people coming from Asia Pacific—what used to be called the Far East—they believe that Israel is the center of the universe concerning high-tech companies.
Q. Why would Asian businessmen or -women see Israel as the center of the universe?
A. The funniest thing I heard was from a Japanese cabinet minister who visited the TASE and told us that we have a wonderful location. I’ve always thought that being stuck in the corner of the Mediterranean is not a wonderful location. But from the point of view of the Japanese, when they look at the world in terms of trading—you know, we open the stock exchange almost at the time when they close their exchange—it’s like the New York market for us. You still have many waking hours to trade on that market.
So I decided to adopt his point of view. Now, we tell everyone about our wonderful location.
Q. Was it difficult for the TASE to emerge from a Zionist-socialist tradition? Some say the TASE is the new kibbutz movement—in real terms but also symbolically.
A. Here we are sitting in the center of Israeli capitalism, yet many in Israel still see [the country] as immersed in older concepts. I personally come from a very socialist family. I’m still socialist at heart in a way, not meaning that we shouldn’t have a capitalistic place like the Tel Aviv Stock Exchange, but I think you can be both. Israel never defined itself as a capitalistic country, but we managed to live in a way that we can sustain both traditions at the same time and in some aspects I’d like for Israel to be more socialist than it is. We are talking now about labor, foreign labor, all those things. I don’t look at issues of that kind from the capitalistic point of view.
Q. Not so many national stock exchanges are headed by women. Any special challenges or observations you have picked up along the way?
A. Let me tell you a secret: I have been a woman for the last 64 years. I don’t know if that played a special role on my overall career. Before coming to the TASE, I established the IT division for the Israeli Security Service, a role which, at that time, was also very unusual. I am not totally alone, however. Women have served as CEOs of national exchanges in England, Ireland, Norway, Sri Lanka, Thailand and Nigeria. There is only one secret of success, but it is not limited to women alone: You must work harder, better and smarter, continuously. Do that and you can achieve everything.