Evolution of the Spanish Stock Market over 120 years: History, Returns, and Opportunities

For the first time, researchers have reconstructed over a century of the historical performance of the Spanish stock market, building a H-IBEX historical index that traces the Spanish stock exchange back to 1900. The study, carried out by researchers of the Carlos III University of Madrid (2025), links the historical returns of Spanish equities to Spain’s macroeconomic shifts – from wars and dictatorship to democracy and European integration.

One of the clearest insights from this historical perspective is that long-term investing in the stock market has consistently proven to be a rewarding and resilient strategy – even through periods of volatility and change.

The report, an executive summary of which can be accessed here, covers 120 years of historical market returns in the Spanish stock exchange, their connection with the macroeconomy, and long-run performance, based on an original monthly H-IBEX index that applies the methodology of today’s history of the IBEX 35 index back to 1900.

The results reveal a story of endurance and transformation. Spanish stocks delivered an average real return of around 3 % per year – below other European markets – yet after the 1980s, when financial liberalization in Spain and stability took hold, returns accelerated and volatility dropped sharply.

To measure more than a century of historical performance of the IBEX index, the authors developed the H-IBEX, or “Historical IBEX,” an index that connects seamlessly with today’s IBEX 35 index. It was based on the largest companies in the Spanish equity market, adjusted for mergers, new issues, and delistings – ensuring it reflected what a real investor could have owned at any point in time.

The reconstruction avoided distortions such as survivorship bias or missing data. Dividends – which accounted for over half of total returns – were reinvested, giving a realistic picture of long-term equity wealth in the equity market in Spain and the Spanish securities market.

Over more than a century, Spanish equities have moved in step with the Spanish stock market and economy – thriving in periods of growth and openness, and struggling during times of conflict, inflation, and crisis. Each decade tells part of a broader story about how the evolution of Spain’s financial market responds to stability, reform, and investor confidence.

• Civil War and autarchy (1910s to 1940s): Inflation and instability caused negative real returns.
• The 1960s boom: A “golden decade” for investors, with strong growth.
• The 1970s to 1980s crisis: A true “rare disaster” for investors – real equity wealth plunged by more than 80 %.
• Post-liberalization (1980s to 1990s): As Spain opened to Europe and modernized its markets, real returns surged to 7–8 % per year, aligning with other advanced economies.

Yes – and quite accurately in some periods. The study found that returns of Spanish stocks anticipated economic cycles by up to 10 quarters, particularly after financial liberalization in Spain in the 1980s. Before that, under financial repression (1940 to 1984), weak regulation and poor transparency limited the market’s predictive power.

Once reforms opened the system, stock prices began to move in sync with GDP, reflecting Spain’s economic growth and the economic development in Spain. Healthy institutions made the market not just a mirror, but a predictor of economic performance.

Despite a devastating 31.6 % GDP collapse between 1936 and 1939, the war’s effect on equity holders was milder than expected.

Because trading was largely frozen, investors couldn’t sell in panic. When markets reopened, prices had already rebounded above pre-war levels as recovery was anticipated. Still, once adjusted for inflation, real losses ranged from –2 % to –18 %.

This episode highlights the link between the Spanish stock market and economy.

The turning point came in the late 1980s and early 1990s, when Spain joined the European Community and modernized its financial markets.

New regulation, advanced trading technology, and stronger investor protection transformed the market into one of Europe’s most dynamic. An investor who invested in the H-IBEX historical index at the low point of the 1980s slump would have earned a 14 % annualized real return by 2000, and around 7 % through 2020 – clear evidence of the long-term rewards of reform, macroeconomic stability in Spain, and patience.

Before the 1980s, Spanish stocks provided little protection against inflation, especially during the Civil War and the stagflation era. But macroeconomic stability in Spain and monetary discipline under EU and eurozone frameworks changed the picture.

From the mid-1980s onward, equities became a reliable inflation hedge – investors who held for at least seven years typically achieved positive real returns.

The century-long data confirm the idea of a “Triumph of the Optimists”: despite wars, crises, and inflation, patient investors ultimately prosper.

Spain’s experience demonstrates that strong institutions, sound macroeconomic policy, and openness to global markets are the true engines of profitability of the Spanish stock market and the evolution of Spain’s securities market.

For investors, the message is clear – long-term investing in the stock market has consistently proven to be profitable. Spend time in the market, rather than trying to time it, remains one of the most powerful strategies for building sustainable wealth. History offers a timeless takeaway – stability compounds.