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The American stock market in 2021 has been a tug of war between the ”Growth” and ”Value” stocks so far. The tech-heavy American index, NASDAQ 100, has seen a Year-to-Date (YTD) increase of 3.6% as of May 11, 2021. The Chinese stock market index, China A50, has surprisingly seen a Year-to-Date (YTD) decline of -0.2% till May 11. On the other hand, IBEX 35 or ESP 35 or Spain 35, the Spanish stock market index consisting of 35 largest Spanish Companies by market capitalization, has already given a YTD return of 13.36%.
Why IBEX 35 Outperformed its peers?
The Spanish index IBEX 35 or ESP 35 consists of companies, mostly in the financial, energy, metals and tourism, and apparel industry. There is no other tech company, except INDRA, in the Spanish IBEX35.
The stocks in the financials, energy, metal, tourism, and hospitality industry have seen a resurgence with the reopening of economies and rapid vaccination drives.
See the pie chart below showing the breakdown of IBEX 35 stocks by sector.
The major Spanish banks like BBVA, Santander Bank, and Caixa Bank have a significant weightage in the IBEX 35. These 3 banks add up to 22% of the weightage of the IBEX 35. In fact, the banking and financial sector accounts for 25% of the weightage of the IBEX 35.
The Spanish economy is heavily reliant on the tourism sector. The COVID-19 was a major blow to the tourism, hospitality, and aviation sector. With the reopening of the pubs, resorts, and restaurants, this sector is likely to pick up the pace. Since 25% of the IBEX 35 weightage is directly related to the tourism sector, the IBEX 35 will continue to outperform in the coming months of 2021.
The recent commodity rally has been a boon to the crude oil refiners, steel, aluminium and other metal companies. Arcelor Mittal, the leading producer of steel in the world, trades on the Bolsa de Madrid and accounts for 1.14% of the weightage of IBEX 35.
The energy, metals, Financial, Tourism, and Hospitality sector account for nearly 80% of the weightage of the Spanish IBEX 35.
You can now see why IBEX 35 is on such a fast pace to recovery.
How is IBEX 35 Spanish Index Different from other Indices?
IBEX 35 is different from Nifty 50 or Germany 40 or CAC 40. The weightage calculation is very different.
Company and sectorial weights in Spanish IBEX 35 Index
The hospitality and energy sector dominate the IBEX 35. There are hardly any tech companies.
Future Outlook for IBEX 35
IBEX 35 is likely to benefit from the reopening of the economy.
Trading Strategy/My Opinion
It doesn’t matter if you are an avid reader of Wall Street Journal or a regular viewer of
In February and March of 2021, the rising interest on 10 year US treasury led to the decline of tech stocks. However, April
Background:
After graduating in Mechanical Engineering from IIT (BHU) Varanasi, India, I pursued a dual degree Master's program in Europe (MS in Biomedical Engineering at RWTH Aachen, Germany and MS in Bioengineering at Trinity College Dublin, Ireland). I am currently working as a 'Manufacturing Engineer' in a MedTech company in Ireland.
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