Spanish equity markets look attractive notwithstanding inconclusive election results and slowing growth

The November 10 elections did not solve the political deadlock in Spain, suggesting ongoing political uncertainty. Most importantly, a passing of a 2020 budget looks unlikely. Further fiscal consolidation will depend mainly on growth and falling interest rate expenditures.

Highlights:

  • The November 10 elections did not solve the political deadlock in Spain, suggesting ongoing political uncertainty.
  • Most importantly, a passing of a 2020 budget looks unlikely. Further fiscal consolidation will depend mainly on growth and falling interest rate expenditures.
  • The Spanish economy is set to slow but will still outperform the euro area average.
  • With respect to financial markets we detect value in Spanish equities. They are relatively undervalued and the price earnings differential versus the EMU index looks extreme.

Download the full publication below

SPANISH EQUITY MARKETS
LOOK ATTRACTIVE
NOTWITHSTANDING
INCONCLUSIVE ELECTION
RESULTS AND LOWING
GROWTH

RELATED INSIGHTS

A (TEMPORARY) COVID ‘LEG DOWN’
The rise in new Covid-19 cases and renewed lockdowns across Europe are casting long shadows over the economic recovery and markets. Yet much more targeted restrictions, a strong Chinese rebound and continued massive fiscal and monetary policy support will keep the second wave’s impact far more muted than in spring.
COVID-19 FACTS & FIGURES
According to the IMF’s Managing Director, strong international cooperation on coronavirus vaccine could speed up the world economic recovery and add $9 trillion to global income by 2025. A WHO trial found that Remdesivir, Hydroxychloroquine, Lopinavir and Interferon have little or no effect on hospitalized Covid-19 patients.
INCORPORATING QUANT SIGNALS INTO EU EQUITY SECTOR/STYLE STRATEGY: MAINTAIN A TILT TO CYCLICALS AND VALUE
We present an update of our proprietary equity valuation tool, based on quant models. It provides indications of over- or undervaluation for different sectors and styles of European equities, which is further enriched by our qualitative analysis.