Companies such as Banco Santander, Iberdrola or Telefónica derive a large part of their income from the country where 40,000 million are at stake in investments
The assault on power in Brazil has reactivated all alarms about the big Spanish companies with interests in the region. Something that was particularly evident on Monday in the Ibex-35 which, after starting the year with strong gains, puts the brakes on Monday due to the exposure of its great values to the country of Rio de Janeiro.
In fact, the national park is the most exposed in all of Europe to a country that is the second destination of Spanish exports to Latin America (2,360 million euros in turnover, only after Mexico) and the fourth in investment with about 40,000 million euros.
Against this background, the Ibex-35 lags the gains of the rest of the European stock markets, falling 0.4% with securities with interests in Brazil exerting particular downward pressure. “We must be alert to the social conflict in the country following the attack on the Congress which, just a week after his inauguration, questions the leadership of Lula da Silva. While it has no signs of moving forward, it could cause volatility in the stocks most exposed to the country,” Renta 4 Banco analysts say.
Banco Santander is one of the most affected in its price with a drop of 1%. And it is that in the first nine months of the year, the region contributed more than EUR 2,020 million to the group’s attributable profit in the first nine months of 2022 (in Spain it was EUR 1,104 million) and almost 28% of its profit totals .
Mapfre is also closely following developments within the financial sector. Brazil is the second regional area that contributes the most to the Group’s profit, with EUR 93 million, 86% more than in the same period last year.
Telefónica is one of the major Spanish listed companies with interests in the region. In fact, Vivo (the commercial brand there) maintains the leadership in the mobile market with a share of 38% and 42% in contract. The company accounts for nearly 20% of Telefónica’s total revenues.
Investors are also wary of energy companies such as Naturgy and Iberdrola. The former has great weight in the country with its distribution networks, although the revenues of the sector are regulated, so Iberdrola – through its subsidiary Neoenergía, the largest electricity company in the country – would be more exposed to a possible worsening of the political situation. Overall, Iberdrola allocates 17% of its investments to the country, where it has 15.9 million customers and was one of the major drivers of its profits between January and September.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
