JM Martí Font via Macropolis | Spain is not Portugal, although we cannot completely rule it out. Brussels and Frankfurt want Spain to look like Germany. A grosse coalition will reassure the markets, guarantee the prevalence of budgetary orthodoxy and, on the surface, maintain at least the status quo, something very important to the European institutions, the financial powers and the European political class who doesn’t like changes.
Spain has been on a kind of roller coaster ride in 2015, lurching between good and bad news. There was a lot of the first, but it seems not quite good enough to please and impress Spaniards, if the outcome of the general elections is anything to go by. Unless the Socialist ‘barones’ (the regional bosses) can persuade PSOE leader Pedro Sanchez to give the PP a chance to form a new government with the backing of Ciudadanos, there could be worse to come.
The Trade Ministry released figures for foreign investment in Spain in the nine months to September, which showed a 42.9% year-on-year increase to 15.763 billion euros, excluding divestments. This good news coincided with a sharp fall in the IBEX 35 after the result of Sunday’s general elections.
Many people feared that the outcome of the December 20 elections in Spain would be difficult to manage. But the final situation is much worse than expected. As soon as the recount began after the voting, the conservatives of Prime Minister Mariano Rajoy’s Popular Party (PP) lost their hopes of forming a majority government with Citizens (Ciudadanos). Spain is now, undeniably, facing a period of difficult coalition-building after yesterday’s elections. And this is a very worrisome situation for the country as uncertainty is likely to increase, affecting the mood of investors and companies.
Last night, the leaders of the Ciudadanos and Podemos emerging parties joined forces to deliver a scathing bashing to the Socialist candidate during the debate held as a foretaste of the Spanish General Elections on December 20th. Spanish Prime Minister Rajoy judiciously declined the invitation to assist at the expected slaughtering.
The Spanish economy is in the “champions league” in terms of GDP growth, but has failed the deficit, unemployment and debt exams. The autumn forecasts from the European Commission raised the deficit non-compliance to 4.7% of GDP for this year and 3.6% for 2016, well off the levels of 4.2% and 2.8%, respectively, previously agreed with Brussels.
Fernando Barciela | The IMF and other international organisations including the OECD are very worried these days that the global economy will only grow 3.3% or less this year. On the other hand, they are very happy about Spain achieving the same level. Why? What makes the diference?
UBS | Pro-independence parties in Catalonia have won a majority of seats – but not of the total of votes cast. As a result, we would advise investors to remain cautious about buying Spanish sovereign debt until some clarity emerges over the next steps of the new regional government.
The proximity of the regional elections in Catalonia, due to take place at the end of this month, combined with the uncertainty over the results of this process and its consequences, is leading foreign and many domestic investors to reduce their exposure to the Spanish stock market.
MADRID | May 9, 2015 | By Fernando G. Urbaneja | Spanish banks are still the central pillar of the Spanish stock market: seven lenders account for nearly 40 percent of the IBEX-35 index.