"Spain is in a dead end." "The Ibex, at least since month of March". The houses of analysis improvised on Wednesday documents in which y tried to calibrate effects in markets of major political crisis to which Spanish democracy has faced in its four decades of history. Until last Friday seemed to believe that problem would not reach se dimensions: rating agency S P kept qualification of Spanish debt stable.
On Wednesday, on or hand, Ibex, main selective of Spanish stock exchange lost 10,000 points for first time in more than half a year, far from maximum of 11,250 reached last May.
"The survival of Spanish Government and regional authority in Catalonia are in air." Given tumult and apparent inability to reach an agreement, coup to economic stability in Spain is forcing markets to react, "summed Peter Garnry, head of equity strategy for Saxo Bank. This analyst anticipates that "dead End" in which Spain is able to take Ibex soon to 9,500 points. The rises of year, which in May amounted to 14%, are now left in a 6% lean.
Almost all values closed on Wednesday in red. They led losses in Sabadell, with 5.69%, and CaixaBank, with 4.96%. The joint capitalization of both entities has fallen by almost 3 billion euros since Sunday, day of illegal referendum on independence. The Colonial real estate, also Catalan, lost 5.51%.Learn More
- Oryzon is shot in bag after moving its headquarters from Barcelona to Madrid
- Guindos says that clients of Catalan banks "have nothing to fear"
- CaixaBank says to take action, "I would do it in defense of customers, shareholders and employees"
But on list of people affected by swings of Catalan politics are also or financial institutions such as Santander, Bankia, BBVA and Bankinter. All of m were left on Wednesday between 3% and 4% of ir stock market share. Real estate, energetic, tourist ... Companies from all sectors suffered political tensions. They only closed in positive Abertis, Siemens Gamesa and Arcelor.
Josep Oliu, president of Sabadell, tried to appease shareholders and customers by ensuring that, in view of "disturbing" political situation that Spain lives, entity is prepared, "if necessary", to "take sufficient measures".
"Noise and Confusion"
The Minister of Economy, Luis de Guindos, also wanted to send a message of tranquility. "Catalan banks are Spanish and European banks." "They are solid entities and ir clients have nothing to fear," he said. "We are seeing times of much noise and confusion, but evolution, for moment, of Catalan economy is positive," he insisted.
This black day for Spanish stock exchange — still far from one experienced day after Brexit, when Ibex yielded 12.35%, greatest decline in its history — contrasts with calm in main European indexes. While German Dax rose by 0.5%, French Cac, British FTSE and Euro Stoxx receded minimally. The Italian Mib did experience an important fall of 1.44%. Italy, with a more fragile economic situation than most of its neighbours, fears a contagion effect if Catalan crisis is aggravated.
The bond market has also been dotted by challenge launched by government that presides Carles Puigdemont. The Spanish risk premium — indicator that measures difference paid for investing in German bonds, ones considered safest, and Spanish — continues upward. The rise of risk premium damages both Spanish treasury, which must pay more to borrow, as well as companies. Despite this upturn, effect of political crisis is, for now, quite moderate. This is explained by dampening effect provided by European Central Bank, which, with its ultracheap money policy and massive debt purchases, maintains unusually low eurozone financing costs.
XTB analyst Joaquín Robles believes that possible application of article 155 of Constitution — which provides for suspension of powers of an autonomous community if it does not fulfil its legal obligations or acts against general interest of Spain — could make Rebound to market. Investors could have already discounted a unilateral declaration of independence, argued analyst in statements to Europa Press. In this sense, president of Círculo de entrepreneurs, Javier Vega de Seoane, asked to apply this article; And he said that it would have been better to do so after Parlament passed transience and referendum law. Seoane asked to "anticipate" footsteps of independenceists. "There have been enough things to implement 155," stressed Antena 3.
Despite bad news, some analysts ask for caution in a still very uncertain situation. "The market first shoots, and n asks," points out a financial source that, faced with nervousness of sector, prefers not to give its name.
This source believes that in situations where re is very little information about future evolution of events, investors first discounts most negative scenarios, and n Recularán if se black forecasts are not fulfilled. "It occurred with Brexit and took place with threats of North Korean leader Kim Jong-un. The high volatility that we are seeing is explained by a fundamental characteristic of markets: y react with fear, he concludes.