Spain's IBEX Seen Gaining Ground in 2021 as Economic Activity Normalizes
December 30 2020 - 10:48AM
Dow Jones News
By Rodrigo de Miguel
Spain's IBEX-35 index could have a clear horizon in 2021 after a
difficult year due to the economic collapse caused by the
coronavirus pandemic, according to analyst forecasts.
The index will close this year with a decline of around 14%,
hindered by bank and tourism stocks, which have been hit
particularly hard by the health crisis due to the strong impact on
the economy and significant mobility restrictions.
However, the development of vaccines--whose distribution has
already begun in Spain--makes the prospects for the Spanish market
more optimistic for 2021, analysts say.
"If Spain can get the virus spread control under control in the
first quarter, there is so much pent up demand that the IBEX could
rally over 10% in 2021," says Edward Moya, senior market analyst at
Oanda. "As Europe returns to pre-pandemic life, travel to Spain
will provide a large boost to the economy," he says.
Sectors closely linked to the economic cycle such as banks
should see a strong rebound next year as the economic situation
normalizes, says Magdalena Bassi, senior portfolio manager at
A&G private banking. However, the financial sector is unlikely
to reverse the downward trend of recent years, she adds.
"The situation of confinement and social distance will probably
result in low rates for longer in Europe and in impaired loans
problems for the financial sector, once the subsidies and
moratoriums on loans end," she says.
The correction of the Spanish index in 2020 can be explained by
the weight of the services sector, especially the financial sector.
Banco de Sabadell SA has plummeted almost 64%, Bankinter SA more
than 30% and Banco Santander SA almost 27%.
Renewable energy companies are likely to lead gains for the IBEX
in 2021, says Dario Garcia, analyst at XTB.
In 2020, the energy group Solaria Energia y Medio Ambiente SA
has risen around 245%, the highest of the IBEX-35, while the wind
turbines manufacturer Siemens Gamesa Renewable Energy SA has soared
around 110%, the second best performing stock this year.
Renewables are set to benefit greatly from fiscal policies in
the coming years, says Ms. Bassi from A&G private banking. "The
multiples are high in this sector, but probably this expansion of
multiples will continue, largely encouraged by sustainable
investment," she says.
--Carlos López Perea contributed to this article.
Write to Rodrigo de Miguel at
rodrigo.demiguelroncal@dowjones.com
This story was translated in whole or in part from a
Spanish-language version initially published by EFE Dow Jones, a
partner of Dow Jones & Co.
(END) Dow Jones Newswires
December 30, 2020 10:33 ET (15:33 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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