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: Spring forward, fall back - (Asia-Pacific markets rose with European and US futures up) – Asia-Pacific markets rose aided by a perception of softer monetary policy and the last minute gains in the US market. Futures for Europe and the US are up.

Response to the crisis: No good options - (The Cepyme SME association warns of the closure of 4,000 SMEs due to the effect of rising inflation, minimum wages and payroll tax (Expansion p31)- The Government’s decision to try to tackle the crisis via boosting government/worker income has impacted SMEs especially hard, with consequences for the economy. Those SMEs that were able to, passed on the higher costs, adding to inflationary pressures. Those that could not, saw their margins decline, in some cases forcing them out of business.

Ferrovial: Suspición may be worse than reality - (The Ministry of the Economy says that there are no economic reasons for Ferrovial’s change of domicile (Expansion p3) – The Ministry of the Economy stating that there are no economic reasons for the transfer of the domicile out of Spain, urging Ferrovial to unveal its “real” reasons, is not a good look. If indeed there were no economic reasons for the move, this would point to distrust of Spain’s legal/regulatory environment, which sounds even less appealing from the point of view of investors.

Hotels: Carpe Diem! - (Hotel operators enjoy a record Easter period and point to good prospects for summer, with likely occupancy and pricing above 2019 levels (Expansion p15) – There had been plenty of signs of Easter being a good period for Spanish hotels. And the actual numbers seem to have met the expectations. Despite the loss of purchasing power due to the rise in inflation, spending on holidays does not seem to have suffered. This would seem to point to a change in habits by consumers, possibly linked to the impact of the Covid period.

Banks: Helping debtors to pay - (Renegotiation of the terms of mortgages treble due to the rise in rates, accounting for 7% of the volume of transactions in Jan-Feb (Expansion Sat p9) – Given the sharp rise in interest rates and loss of purchasing power as a result of rising inflation, an increase in the volume of renegotiations of mortgages (lengthening of repayment periods, switching from variable to fixe rates etc.) was fully to be expected. This was probably partly aided by the new code of good conduct agreed with the Government, but most would have taken place in any event, as the banks are the main interested party in avoiding non-payment.

*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.?