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: Inflated concerns - (Asia-Pacific markets fell along with European and US futures) – Asia-Pacific markets declined on renewed inflation fears. Futures for Europe and the US were also down.

Response to the crisis: There is only so much I can take - (Industry sees inflation pressures and warns of new price increases (Expansion p26) – I have already commenting on the issue of corporates not being able to cope with accumulated price increases without passing them on. This is exactly the ECB’s worst nightmare.

Ferrovial: Why? - (Ibex companies rule out following Ferrovial out of Spain (Expansion p3) – Corporates (especially listed corporates) have a duty to increase profits and dividends for their backers. Lowering the tax bill and improving legal security is part of it. Spain is in the EU, so if this better achieved in other EU countries, what is the problem? There is also a PR element in this, so consumer-centred companies may not follow. But it might be a good idea to look into what is the cause (and maybe fix it).

Cellnex: Less is more - (Considers allowing entry of partners into its subsidiaries in order to reduce debt (Expansion p9) – I have often commented on the fact that Cellnex investors seemed to believe that there would be eternal growth. Once growth options have shown a limit, the point is to lower debt and show a profit. Selling minority stakes in subsidiaries is a good start to reduce debt. But to be able to produce a recurrent profit would be better.

Macro: Maybe a not good combination - (Spain’s manufacturing PMI for February posted 50.7 vs. 48.4 in January (S&P Global) – The improvement in the February manufacturing PMI is an obvious positive. But new orders are weakening. And costs could go higher. But sentiment seems to improve. Not sure that is a good combination.

*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.?