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: Not so fast my friend - (Asia-Pacific markets declined with European markets and US futures also down) – Asia-Pacific markets declined on concerns regarding the Chinese economy and central bank push backs against the idea of interest rate cuts. European markets and US futures were down.

Response to the crisis: Less for more - (According to the employers lowering the working week implies a tacit rise in the minimum wage – Expansion p30) – The President of the Employers’ Federation is understating the issue. Lowering the working week without a corresponding adjustment to wages is not only an implicit rise in the minimum wage but of all wages on a wage per hour basis. As I have said before, without an improvement in productivity this would be a negative development.

Naturgy: Like father, like son - (Blackrock will maintain the “status quo” in Naturgy despite the turmoil in the Government - Cinco Dias p3) – Other than the desire to make noise and show rejection of multinational investors, the opposition of the far-left Sumar and Podemos parties to Blackrock becoming the ultimate beneficiary of the GIP Naturgy stake does not make much sense. There is no change in the direct shareholding by GIP, with the only modification being the acquisition of GIP by Blackrock. Both are multinational investors with similar aims and Blackrock does not seem to be intent on changing strategy or even representatives on the Board. It’s not about GIP or Blackrock, what the left-wing parties would like to see is a government owned Naturgy.

Iberdrola: Green machine - (The Chairman says that Iberdrola will grow and continue investing and increasing the dividend – Expansion p3) – Iberdrola was one of the first companies to carve out a niche as a “green” utility, and this has served it well. And it has been clever enough to focus its investments in jurisdictions with strong rule of law. Lately it has also been hedging its bets by signing alliances with financial partners which will reduce exposure and provide funds for growth. On that basis the statements by the Chairman seem fairly credible.

Investment: Crowded house - (According to the Bank of America survey investors bet on a soft landing with falling rates which should favour technology and value stocks – Expansion p22) – According to the survey prospects for 2024 are bright due to almost unanimous expectation of a soft landing with falling rates. In that context it would be logical for long duration stocks (technology) and cyclical stocks (value) to do well. The main problem is that this looks very much like a crowded trade with little room for error.

*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.