Take 5 and come back tomorrow
First of all, let’s be clear. The following is not investment research/advice.?And, as such, it involves no investment recommendations. These are my thoughts on Spanish equity issues, which I find relevant. I share them freely (and not just as regards price). As always, I am only trying to help. Please read the rest of the “discomplainer (*)” at the end of the article.
Market environment: Good is bad, again - (Asia-Pacific markets declined with European and US futures down) – Asia-Pacific markets declined on the market interpreting Fed comments regarding a resilient economy as pointing to higher/for longer rates. European and US futures are down.
Response to the crisis: Harder to exit, harder to enter - (Parliament authorises labour inspectors to intervene in collective dismissals (Expansion p23) – Making it harder to downsize for companies that need it is a negative move. The higher the exit barriers, the higher the entry barriers.
Repsol: All good - (Will pay €2.4bn to shareholders, devoting 30% of its cash to dividends and buybacks (Expansion p3) – Investing in fossil fuel producers is now socially unpopular. So, providing an attractive shareholder remuneration is a requirement. But using a high percentage of cash for remuneration rather than investment reduces the potential increase in supply, which pushes up prices and profits. So, all good.
Banks: Size matters - (The sector mortgage portfolio falls sharply in the second half of 2022 (Expansion p16) – Lower new signings and repayments are lowering the overall portfolio of mortgages. This is a logical byproduct of higher interest rates. Higher rates are good for margins. But in addition to the risk of worsening credit quality investors should also focus on volumes. Size matters.
Labour market: The road to hell is paved with good intentions - (Spain has the highest dismissal cost in the EU (El Economista p24) – High dismissal compensation is very positive for those that receive it, but it tends to discourage hiring, as corporates then carry a large potential liability. The road to hell is paved with good intentions.
*The above information has been read/understood/summarised/evaluated/copied as well as I could to provide a guide to Spanish equities, given available timing/intellectual constraints, and I accept no liability for misreading and/or mistranslating the original copy as set out in my previous article (which I urge you to check, as I am only trying to point you in the right direction, I hope). As for what you may decide to do, after reading the above, please contact your legally approved provider of investment advice on Spanish equities.?