The Ibex 35 is outperforming other stock exchanges in Europe. To date the ibex 35 has gained 23 % over 2006. In comparison, the Dutch stock exchange (AEX) has gained only 11% this year.
One of the factors that has contributed to the rise of the Spanish stock exchange index (the IBEX 35) is the (expected) takeover premium that is prized in the different stocks.
Endesa for example - the electricity company - has more than doubled its value has been the first company that has been revalued because of two takeover bids; the first from Gas Natural - the Spanish Gas supplier and later on an increased bid has been launched by the German Electricity supplier - E-On. Endesa’s stock has risen from 22 euro in January to 34 euro currently.
The rise of Endesa has revalued the whole energy sector and energy is highly represented in the IBEX 35; there are about eight utility companies listed on the Ibex 35.
Recently, the Spanish construction company Sacyr Vallehermoso SA jumped into the country's red-hot energy sector, buying 9.23% of integrated oil company Repsol YPF SA (http://news. morningstar.com/news/ DJ/M10/D16/200610161417DOWJONESDJONLINE000652.html?Cat=Energy) This is not to be seen as a hostile acquisition, but more likely to prevent that foreign companies will bid on the Spanish Energy supplier. . .
“Banks enter the game, ” quotes the newspaper in the recent weekend edition. The two bank on which the market speculates are BBVA (the second largest bank in Spain) and Santander the largest bank in Spain and number 10 in the world (according to market value (which is about 84 billion Euros).
An expert from Morgan Stanley (Iñigo Marco Gardoqui) thinks that “it is impossible that a hostile bid on BBVA will be launched. ” And another analyst (Alberto Morillo) states that BBVA will most probably grow further by buying others. This is possible as long as the stock value continues to increase. The value of BBVA has increased inline with the rise of the index.
The Construction sector is also showing a high performance this year. . .
But the question for the individual investor remains, “what to do?”
The fundamental oriented investor should analyze the individual companies, in relation with growth in (expected) earnings. The technical oriented investor can help himself with the high amount of charts that are available on the market. For example from this website: http://labolsa.com/tecnico/ENG/ - focused on a technical analysis of the company ENAGAS.
But without all that knowledge, there is a more simple way to (decide to) invest. The fact that Madrid (IBEX 35) is outperforming other exchanges must have a reason. But you do not need to know this reason. Take for instance the Film stars “market. ” There are film stars that are gaining attention and admiration by the public, where others are on their way back. It is easy to recognize these stars; George Clooney for example, recently invited by Martini, is still loved by the public.
And so is Spain at the moment. What more do you need to know?
© 2006 Hans Bool
Hans Bool is the founder of Astor White a traditional management consulting company that offers online management tools. Have a look at some of our free management tools