Carax Alphavalue | Up until last Sunday’s events in Catalonia, Spain’s economic recovery was well discounted in market terms, Carax Alphavalue says. But after the Catalan government’s “pretence poll” and the central government’s “heavy-handed” response, investors view Spanish stocks as a more risky bet and less of a buy opportunity for now.
Shares in biotech company Oryzon Genomics continued their advance today, after the company said on Tuesday that it plans to move its headquarters from Barcelona to Madrid.
At the moment, the biggest losers in the Ibex 35 index after Sunday’s referendum vote in Catalonia are the banks, particularly the Catalan lenders. Both Sabadell and CaixaBank have acknowledged that if independence were to happen, they would move their headquarters to another autonomous region in Spain. In this way they would keep their access to the ECB’s liquidity and their clients would remain under the protection of the national and European Deposit Guarantee Fund. But perhaps it’s too soon to ring the alarm bells: while the Ibex dropped, other European bourses rose. This shows that Catalonia is still far from becoming a systemic risk for the EU.
A British newspaper asked this question this morning and it’s very pertinent. What has been happening in Catalonia recently puts Spain, a member of the EU, at risk of failure. Essentially what has taken place in Catalonia is the violation of the constitutional order and the rule of law.
The main problem from today onwards is not that Catalonia obtains independence, because there is zero possibility of that happening. It’s rather the weakening of Spain and Europe. Prime Minister Rajoy has the law on his side, but he is politically weak. He needs to look for back up outside, from Europe. But effective support, not notional.
What’s happening in Catalonia? The narrative put together by those in favour of independence is quite incredible: how is that so many Catalans feel so badly treated in a democracy like Spain’s? The crisis in Catalonia threatens the stability of Spain and even the European project.
The Corner | The fiscal situation is one of the arguments the pro-independents in Catalonia have been using. And in this regard, we wanted to share with our readers a snippet from a televised debate between Josep Borrell, a former president of the European Parliament, who describes himself as “Catalan, Spanish and European,” and Oriol Junqueras, leader of the pro-independence Catalan Republican Left (ERC) party.
Spanish bond prices are not reflecting the risk of Catalan secession simply because the foreign economic press doesn’t rate the likelihood of it happening, nor the conflict which will follow 1-O.
Angela Merkel’s victory in Sunday’s general election in Germany was insufficient and fairly negative for the rest of Europe. For one thing, the Macron Plan, to create fiscal unity, has automatically been pushed back for at least four years.
French coverage of the Catalan independence referendum has something of the left-right split we saw in Germany, but most of the media are united in calling on Catalan and Spanish leaders to meet each other in the middle.