The Spanish Stock Market, One Of The Most Undervalued In Europe. It is Trading At A 30% Discount To The MSCI Europe

Madrid Stock Exchange revision

T.C. | Yesterday, the Spanish stock market closed at a twelve-month high, with the selective Ibex 35 index above 8,800 points (8.815). The good results from some companies which have already presented their first quarter figures (Santander, Repsol, Naturgy, Indra, Viscofan…) pushed up the index. However, as Morgan Stanley analysts explain, “Spain continues to have negative EPS (Earnings Per Share) and DPS (Dividends Per Share) revisions relative to the market… although it continues to trade at a 30% discount to the MSCI Europe”, when “the historical average is 20%, making it one of the most undervalued countries in the region.”

In a brief review of the continent’s stock markets, Morgan Stanley explains that Sweden is the country with the best EPS and DPS revisions in the market, “being the second best performer over the past three months… and the second most overbought.”

Switzerland “has lagged the market, underperforming by 6% in the last three months, given the strength of cyclicals. Switzerland is starting to look attractive at these levels.”

In the French market “relative returns are back to pre-pandemic levels…although there is a growing disconnect between relative returns and EPS.”

The UK “continues to have little investor affection, with relative returns at the bottom of the five year range.”

Meanwhile, the Italian market “has undergone a pullback from recent overbought levels… but still remains far from oversold. Valuations for Italy are close to the long-term average.”

In the report, the MS analysts say they provide “a summary of returns, sentiment, valuation and fundamental trends in European countries.”

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.