Investors flee regulatory uncertainty and the Ibex-35 loses 1.9% to 7,945 points
Week to quickly forget in the listed banking and energy sector. The recovery of these companies on Friday failed to offset the week’s heavy losses, accelerated by the announcement by the government’s president, Pedro Sánchez, during the debate on the state of the nation, to introduce two separate taxes in the country. hope to raise a total of 7,000 million euros in two years.
The large listed companies of both sectors – and therefore also their shareholders – closed the week with a combined loss of 11,000 million euros on the stock exchange. Taking Monday’s close as a reference, the session prior to the announcement of the new taxes, the red numbers are similar, at EUR 10,794 million.
The declines were more pronounced in the banking sector, with a collapse of EUR 6,456 million in the combined capitalization of the five entities listed on the Ibex-35 (Banco Santander, CaixaBank, BBVA, Bankinetr and Sabadell) since Tuesday announcing the tax. In total, the value on the stock market has increased from 102,000 million to 95,948 million euros.
Since the black day that the banks experienced on Tuesday, with declines of more than 10% in some entities, the balance has been hugely negative for investors. Losses exceed 8% at CaixaBank, 7% at Sabadell and Bankinter and 6.2% at Banco Santander. BBVA was able to withstand the onslaught better with a cumulative drop of 4.2% since Tuesday.
The surprise factor was key to the industry’s worst performance, as the market had discounted power utility tributes for weeks. In addition, as Rafael Alonso, an analyst at Bankinter, recalls, in the case of banks, “the key details of the plan are still unknown, such as the amount of tax to be applied, whether it will be on profits or deposits, how it will be calculated.” ..» And in an environment like today’s regulatory uncertainty is the biggest enemy when it comes to attracting investors.
The rating agencies calculate an impact on profit for the sector of approximately 12%. And Fitch warned these days that “Spanish banks were already facing economic doubts, so the tax, which would only apply to domestic operations, could affect profitability prospects and reduce their competitiveness against European rivals.”
The energy giants (Iberdrola, Naturgy, Endesa and Repsol) for their part left 4,300 million euros in capitalization, with Endesa being the most affected, accounting for almost half of that figure (-2.184 million euros). For its part, Naturgy was the one that had the least impact, with a 0.35% drop since Tuesday deducting just 96 million from its capitalization. Iberdrola lost 3.4%, while Repsol lost nearly 8% in the past four sessions.
Shareholders’ grief has been remarkable this week, with the Ibex-35 losing 1.9% to 7,945 points amid a resurgence of recession panic and new reports from institutions such as the European Commission, BBVA Research or the Independent Fiscal Responsibility Authority (AIREF) rockets its inflation estimates and lowers growth estimates.
Fears of a cut in Russia’s gas supply are also weighing on the minds of investors, who fear countries will adopt “war economy” measures to cope with the situation. As if the scenario wasn’t already complex, Italy has also shaken up debt markets, with the government crisis ending with Prime Minister Mario Draghi’s resignation. “This instability in the eurozone’s third-largest economy and in one of the region’s countries with the greatest fiscal imbalances reminded many investors of the past debt crisis that Draghi himself, at the time, the head of the ECB, resolved said Juan José Fernández-Figares, an analyst at Link Securities. “Currently, the response capacity of the region’s central bank is much more limited, especially since its main objective at the moment is the fight against inflation,” he added.
In addition, market developments in the coming days will be marked by the important meeting of the monetary body on July 21, when the institution will raise interest rates for the first time in 11 years. The question is whether it will do that in 25 or 50 basis points. And given this situation, experts advise staying out of the market until there is more visibility, to avoid the mistake of taking advantage of low prices after a fall to increase positions.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
