"British investors have tended to ignore Israel, but its stock market will be thrust into the limelight this year when it is promoted from emerging to developed market status." This is referring to the fact that Israel is up for OECD membership, and if accepted -- and it looks like it will happen -- Israel will join the prestigious organization and be considered a "developed country."

Some pundits have argued that admission into the OECD will actually hurt Israeli stocks as Israel is about 2% of the MSCI Emerging Markets Index, and its share in the global investment pie would fall to 0.2% if Israel is admitted to the developed markets index. What they neglect to mention is that there is a heck of a lot more money under management in developed markets than in emerging markets. So Israel's weighting may drop, but the amount of money available to invest will be substantially more. In addition, don't forget "overweighting." If fund managers believe Israel is an attractive investment destination, then they can overweight their position to a much higher level than 0.2%.

Look out for Israeli stocks in '08.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/7/08.

Times Online: Israel stocks among top ways to profit in 2008 originally appeared on BloggingStocks on Mon, 07 Jan 2008 11:40:00 EST. Please see our terms for use of feeds.