Despite the global economic slowdown, the Spanish market is proving resilient.
Beatriz Alonso-Majagranzas, Head of BME Exchange, participated in a panel discussion looking at some of the trends shaping the Spanish equity market at AFME’s (Association for Financial Markets in Europe) 14th Annual Spanish Capital Markets Conference. Other panellists included Pablo Portugal, Managing Director, Advocacy, AFME; Ana Puente Perez, Head of Securities Markets and Financial Instruments Legislation, Spanish Treasury; Javier Ruiz del Pozo, Director Secondary Markets Department, CNMV; and Juan Manuel Vasquez Garcia Reynoso, Secretary of the International Committee and advisor of Emisores Españoles.
The world is facing a number of challenging headwinds with rising interest rates, high inflation , and lingering concerns about the stability of the global banking system, all having an adverse impact on growth. Within the eurozone, growth has decelerated while the UK is projected to enter into recession later this year.
Spain, however, is an outlier.
Fuelled by a strong rebound in the tourism industry and the country’s limited dependency (relative to other EU markets) on Russian gas imports, Spain has managed to avoid the worst of the recent downturn. In fact, Spain’s GDP is projected to increase from 1.5% in 2023, to around 2.5% in 2024.
Spain’s ability to navigate the volatility successfully is reflected in some of the gains seen on the IBEX suite of indices (See Chart below)
Similar to the rest of the world, the IPO drought has not bypassed Spain, although BME Growth continues playing a vital role channelling financing to SMEs. “Volatility has impacted company valuations, which has discouraged some firms from listing on the main market. Although we would like to see more listing activity on the BME main market, there have been several big ticket listings by promising companies on our BME Growth segment,” said Alonso-Majagranzas.
Three companies – two REITs Ktesios, Miciso and a renewable energy business, Greening Group – have listed on BME Growth as their SME Growth market of choice, a trend that is expected to continue in 2023. In 2022, 15 companies made their debut on the BME SME Growth segment.
Driving more flows into the Spanish market
Efforts to attract more foreign capital into the local market are currently in train. According to Alonso-Majagranzas, the introduction of the Spanish Securities Markets and Investment Services Act is one such initiative, as it simplifies the listing process and paves the way for lower cost for some products such as fixed income, warrants, etc.
With ESG (environmental, social, governance) becoming increasingly important, the Exchange is looking for ways to support both issuers and investors. “Equity market investors are taking ESG very seriously. As an intermediary, we have a vital role to play in educating and informing issuers and investors alike about sustainability and ESG,” she said.
Such is its commitment to ESG that BME Group launched the IBEX Gender Equality Index, a benchmark designed to represent securities where female board director representation stands between 25% and 75% , and where female management team representation is between 15% and 85%. This focus on ESG will be integral in helping attract flows into the domestic market, and with it liquidity.
Spain’s market goes from strength to strength
Although Spain has not been immune from recent market events, it has handled them well. The introduction of positive regulation and the willingness of FMIs – including BME– to engage on ESG issues means the country is in an excellent position to flourish moving forward.