The Weekly Brief (01 June 2015)Contributor Global Markets Insights Strategy Team
Investors in Spanish equities are running from the bulls, or rather the IBEX 35, which declined 2.0% during last Monday’s trading. The market reacted to the surprising results of regional elections, where no single party gained a majority.
For years, Spanish politics has been dominated by The Popular Party and the Socialist PSOE. Now, the political landscape is changing with a four party system likely after this year’s general election. Spain has experienced a successful export-led and reform-focused recovery post-crisis, and is expected to be the fastest growing Eurozone economy this year. Yet low real wages, and high unemployment at 23%, still prevail. Unhappy Spaniards are looking at the alternatives. Investors should be wary of the uncertainties surrounding the forthcoming general election, and the continued reform agenda under a possible coalition government.
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