Manuel Enrich, chairman of AERI (Spanish Association for Investor Relations), maintains that “the Spanish stock market has only been at all-time highs for a few months; I believe it remains undervalued.”
Are we facing a solid cycle for the Spanish stock market? The Spanish stock market is highly correlated with the major international indices, which is simultaneously a strength and a vulnerability. Based on valuations, the cycle strikes me as solid. Furthermore, Spain is starting from a very lagged position compared to the United States, whose markets have accumulated nearly fifteen years of strong gains. Our market has only been at all-time highs for a few months, and that is why I believe it remains undervalued compared to other international peers. The main risk to this trend lies outside our borders and would come from a significant correction in the major global markets.
What reforms does Spain need to attract more investment? The joint action by the CNMV (National Securities Market Commission) and BME (Spanish Stock Exchanges and Markets) to streamline market operations is a good start, but further progress is needed. The priority is a fiscal and accounting reform that makes it easier for funds, insurance companies, and pension plans to invest in the Spanish stock market. Today, they account for barely less than 6% of the shareholding of Spanish listed companies, something that is difficult to justify by fundamentals. It is also important to review the taxation of retail investors and to simplify regulation. Spain has the capacity to compete as a European capital hub, especially by leveraging its position as a bridge between Europe and Latin America, as well as sectors such as the energy transition, infrastructure, or technology. In recent years, IPOs have slowed down, and some companies have opted for delistings or listings in other markets. At AERI, we believe that Spain has a great opportunity to reinforce the depth of its capital markets.
Where does IR stand in Spain today? IR professionals in Spain, and certainly those representing our members, are perfectly comparable in knowledge and maturity to those in the Anglo-Saxon world. This is not a recent evolution: Spain has been a leader and has seen the function recognized for more than twenty years in international competitions, which is what led AERI to found the Iberian Equity Awards.
