U.S. Investors Warm to Israeli Stocks : Trading: Businesses shun their domestic market, list with American exchanges instead.

Israeli stocks have been among the hottest on Wall Street, but don’t bother calling a broker in Tel Aviv--most of the stocks trade only in America.

In the past few years the Israeli economy has soared, fueled by a wave of highly educated immigrants from the former Soviet Union and a government program of privatization and liberalization.

With investors pouring money into the small country, the Tel Aviv stock market has skyrocketed. But many Israeli businesses are shunning their domestic market and flocking to the United States in search of investors.

Some 50 Israeli companies now list on U.S. exchanges, almost double the number three years ago. About 80% of Israeli companies on Wall Street haven’t bothered to list on the Tel Aviv exchange, said Daniel Meidan, an analyst at PacMed Group, in Tenafly, N.J.

“We can reach a lot more investors on Nasdaq and make a lot more money,” said Craig Kevghas, promotions manager at Scitex, an Israeli maker of sophisticated computer imaging equipment. Nasdaq, the electronic stock market run by the National Assn. of Securities Dealers, is popular with small, high-growth companies.

But money is only one reason Israeli companies list here.

Most Israeli companies traded in the United States are new high-technology companies that use Israel as a research and manufacturing base. They export the overwhelming majority of what they produce and believe that listing on the U.S. exchanges will help give them international clout.

“Every Israeli company that is considering going public in the U.S. knows that it will be a tremendous motivation to the staff and it will have great prestige,” said Ben Ofarim, a spokesman for the Israeli economic mission in New York.

Issuing stock in the United States also is important to marketing efforts “to overcome the fact that these companies are very small, Israel is so far and they have almost no domestic market,” said Lior Bregman, an analyst at Oppenheimer & Co.

At Scitex, only about 1% of its $550 million in sales this past year were in Israel. Scitex stock was up 140% in 1991 and 18% in 1992. But it fell 43% this year after unexpectedly flat earnings.

But other Israeli stocks are soaring. ECI Telecom, a communications company, is up 28% this year and has climbed about eight times in value since January, 1991. Teva Pharmaceuticals, a drug and medical supply company, is up about 25% in 1993 and nearly 400% in the last three years.

For Israeli stocks, the timing is good: U.S. investors are pouring money into foreign stocks.

The Israel-American Fund, a mutual fund for Israelis investing in Israeli stocks trading in America, has shot up 30% in the first 11 months of 1993, Meidan said.

Half of this year’s jump in Tel Aviv’s stock market came after the signing of the Israeli-Palestinian peace accord in September.

The pact “is the icing on the cake,” said Lawrence Brainard, director of research for emerging markets at Goldman, Sachs & Co., but “you began to see real interest two years ago because of the financial reforms and the economic stabilization.”

Israel slashed annual inflation from nearly 500% in the early 1980s to 10% this year. Economic growth rose from about 1% annually in the early ‘80s to about 6% in 1991 and 1992. This year growth of between 4% and 5% is expected.

The Tel Aviv stock market, meanwhile, climbed 20% in the first 11 months of 1993 after doubling in the previous two years. It now hosts about 400 stocks and is valued at about $50 billion.

Israeli stocks trading in America have a value of about $10 billion.