1. Israel from the perspective of foreign investors

2. page 2 Are the foreign investors here?  Saban-Apax-Arkin  Cerberus  Orascom Institutional Investors  Capital Group  Templeton  Fidelity  Boston Company  Pioneer Investment management  T Rowe Price  Schroders

3. page 3 Level YTD (%) Commodities Oil (WTI) US$/b 60.940.0 Gold spot price $/oz 50715.5 Copper 3M fwd $/mt 4,35638.3 Yields EM $ Bond Yield 5.45.3 EM Local Bond Yield 6.7-3.0 Risks EMBI+ Spread (bp) 233-32.9 EM Volatility 13.930.1 VIX 10.5-21.1 Currency movements vs the US$ $/ Euro 1.20-11.3 Yen/ $ 117-12.4 $/ Asia (MSCI) 98-1.1 $/ EMEA (MSCI) 81-7.2 $/ LatAm (MSCI) 7911.5 $/ EM Currency 91-0.2 Fund Flows as a % of assets under management Equity Fund Flows into GEMs - 9.8% Bond Fund Flows into GEMs - 17.0% Top down drivers of emerging markets

4. page 4 Flow of funds into emerging markets in 2005 (1)

5. page 5 Flow of funds into emerging markets in 2005 (2) –10% of flows into equity funds allocated to emerging markets in 2005 –17% of flows into bond funds allocated to emerging markets

6. page 6 Emerging vs developed market performance Israel vs emerging markets Emerging market bond yields

7. page 7 Valuations in emerging markets still lower, though gap closing

8. page 8 Israel in a global context PEEPS GrowthPBVROEDiv Yld Country05 (x)06 (x)05 $(%) 06 $(%) 05 (x)06 (x)05 $(%) 06 $(%) 06 (x) China 111028%7%2.42.124%22%4.3% India 161420%13%3.63.025%24%1.8% Indonesia 1294%33%3.02.526%30%4.0% Korea 1311-19%16%2.11.818% 1.3% Malaysia 1514-6%13%2.22.115%16%3.8% Taiwan 1513-8%17%2.72.418%19%3.7% Thailand 11101%4%2.11.921%20%4.7% Hungary 101121%-7%2.62.128%22%3.5% Israel 211712%27%3.52.918%19%4.8% Poland 11935%21%1.81.518% 4.2% Russia 81146%-30%1.81.626%16%2.1% South Africa 11 38%35%2.52.823%28%3.3% Turkey 151227%43%2.42.315%19%1.4% Brazil 8777%22%2.41.835%30%3.4% Chile 2418-26%34%2.22.010%12%0.3% Mexico 171426%17%4.23.826%27%0.5% ASIA 1412-2%15%2.52.220% 2.8% EMEA 12 34%17%2.4 22% 2.6% LATAM 131050%21%2.92.530%27%2.1% EM 131118%17%2.62.322% 2.6% US 16.415.31582.817 Japan 15.517.418161.610 Europe 13.913.018132.317

9. page 9 Performance of MSCI Israel equity market in global context

10. page 10 Deutsche Bank’s recommended weighting versus benchmark index Foreign investors weighting versus benchmark index

11. page 11 Currency value as % of 2005 PPP fair value

12. page 12 60 Day annualized Vol Equity5YRYTDCurrncy5YRYTD VolAvgchg (%) VolAvgchg (%) Israel 11.024.9-25.25.05.912.3 ASIA 14.419.61.73.64.2-26.5 EMEA 18.417.543.58.011.4-8.0 LATAM 22.320.951.49.811.313.3 EM 13.915.030.16.07.5-9.7 US 11.117.513.0nm Japan 17.521.38.96.89.4-26.1 Europe 11.217.47.38.610.17.4 1Y Beta5YR CurrentAvg Israel0.40.7 Turkey1.3 Argentina1.30.8 Brazil1.51.2 Chile0.70.6 Mexico1.00.8 ASIA0.91.1 EMEA1.10.8 LATAM1.30.9 EM1.0 Country and currency volatility Beta to emerging markets If we are not EM, what are we?

13. page 13 Key Deutsche Bank global forecasts Current level2006F US inflation (core PCE) %1.8%2.0% Fed Funds rate (YE) %4.3%5.0% US real GDP growth %3.7%4.0% China real GDP growth % 8.4% WTI US$/b end period6150 Copper 3M fwd $/mt end period4,3722,976 Gold price US$/oz end period524500 Nickel US$/mt14,16512,566 $/ EUR end period 1.19 1.25 Yen/ $ end period 120114

14. page 14 Deutsche Bank’s Israel forecasts

15. page 15 What can we do next? Move to nominal reporting Increase liquidity  Easy access to stock borrowing  Standardize OTC documentation  Netting  Free float