The reader probably remembers the day when José Montilla, then president of the Generalitat, went to Madrid and warned of “disaffection” and the risk of an “irreversible alienation” of Catalans towards Spain. The day after that chapter, so distant that it now seems from the Jurassic, the Ibex-35 closed at the highest point in its history: 15,945.7 points. We were on the cusp of the Great Recession, which would begin in a matter of months.
That record for the index occurred exactly on November 8, 2007, so it will now be 15 years since everything happened. In that time, almost all of the major stock market indices have surpassed the levels they had then. This is not the case with the Íbex-35, which is currently 52% below the price it set on the record day. The obvious conclusion is that the Spanish stock market is not a very attractive market to invest in. What does the Ibex have so that the results are so thin?
The Ibex-35 crisis
Variation in percentage of the main selectives since November 8, 2007
Main problem: little diversification. “More than 50% of the value of the Ibex is held by five companies: two banks [Santander i BBVA], Telefónica, Inditex and Iberdrola”, explains Xavier Brun, head of European equities at Trea AM. Therefore, the trajectory of these five companies – none of them Catalan, by the way – already determines what happens to the index. And of all of them there is only one, Inditex, that is worth more than in November 2007. The declines in the rest are very pronounced, but the case of Telefónica is particularly bloody: last Friday the share was worth 3.3 euros, 85% less than fifteen years ago.
Lack of diversification: more than 50% of the value of the Ibex is held by Santander, BBVA, Telefónica, Inditex and Iberdrola
The issue is a little more complex than it appears on the surface: Santander, for example, had 9.06 billion in net profit in 2007, and last year the figure reached 8.124 billion. The decline is 10%…but the stock is down 80%. Why this difference? Well, because along the way the Cantabrian bank has issued many new shares, so that the profit for shareholders has been diluted: if in 2007 the profit per share ratio was 1.3, last year it was 0, 4, a third part.
“Today, a few large companies mark the behavior of the Ibex; therefore, it is clear that what would be needed are more large companies”, insists Brun to emphasize the problem of diversification of the Spanish stock market. And not only that: we would also need companies that are “more innovative and with more growth prospects”, he adds.
Santander shares have fallen much more than profits. The reason? The bank has multiplied the number of shares in circulation
The most paradigmatic case is that of the United States, where there are many more companies in sectors of the future – such as technology – and with great competitive advantages because they are world leaders. That is why the S&P500, which groups the top 500 companies in the USA, has grown by 150% since 2007. But the case of the Frankfurt Stock Exchange is also exemplary, which has increased by 63% and is full of large industrial companies.
Some experts point out that the structural weaknesses of the Spanish economy cannot be forgotten as a factor that drags companies listed on the stock market down. “The evolution also depends on the economic situation of the country where the Íbex companies have their interests, and the unemployment rate and the high public deficit weigh down the companies that are on the stock market”, says Alfons Fernández, member of the financial economy commission of the College of Economists of Catalonia.
Not with dividends
When the results are not going well in the stock market, a recurring argument is that if the dividends distributed by listed companies are taken into account, the investor’s results improve significantly. But not even including the dividends, the companies in the Íbex manage to exceed the levels of 2007: in this case they would be 16% below the quota of fifteen years ago.
Protagonists
Last year Josep Antoni Duran i Lleida founded the Academia Europea Leadership, a kind of school for leaders. In other words, “an academic initiative that arises from the obvious need to have people capable of leading the paradigm shift required by global challenges”. In its first year, the academy invoiced almost 63,000 euros and obtained a net profit of 24,000 euros, as the ARA has been able to verify in the Mercantile Registry. This company, however, is declared non-profit, so all profits have been kept as reserves.
Based in the Foment del Treball building, on Via Laietana in Barcelona, the Academia Europea Leadership has a single shareholder, Duran i Lleida himself, who has an alliance with Scuola di Politiche, a similar institution promoted by Enrico Letta , his friend and known for having been Prime Minister of Italy… and for having obtained a more than discreet result in the last Italian elections.
Andrea Orcel, famous for leading a media dispute with Banco Santander after being dismissed, seems to have taken a liking to legal proceedings. Not all have gone so well for him, though. A court in the Balearic Islands has sentenced him to pay 700,000 euros to the construction company of the supermansion he owns in Andratx, as the newspaper reported Last hour. Considering that Santander had to pay him 51.4 million euros without him having worked a single day at the bank, it does not seem that Orcel should have any difficulty in assuming this expense.