International investors reach 46% of the Spanish stock ownership

BME Report on the share ownership structure in Spain

• Non-financial institutions and households become the second biggest owner group, accounting for 20%  each
• Banks and financial intermediaries own the remaining 14%
• The proposal to implement a financial transaction tax would make investing in Spanish listed companies less attractive

The internationalisation of the economy and businesses in Spain continues apace. According to a report of BME’s Research Department on the share ownership structure in Spain, published today, the value of shares listed on the Spanish Stock Exchange held by foreign investors at the end of 2017 reached 46%.The percentage marks a record high following a 3-point growth in a year, 9 points in the last decade and 16 since 1992. “This trend reflects the increasing degree of openness reached by the Spanish economy since entering the European Union - more than three decades ago – and the positioning of the Spanish stock market as one of the most developed in the world”, stresses the report. Globalisation and the involvement of foreign capital in overcoming the crisis have influenced this trend.

According to the report households and non-financial institutions contribute about 20% each and funds, insurance companies, banks and financial intermediaries represent the remaining 14%.

After the strong increase reported in 2016, the participation of Non-Financial Institutions revisits the level of 20% of the total and becomes the second most relevant owner of shares listed on the Spanish Stock Market.

However, although the significant presence of retail investors or families has historically been one of the differentiating features of the Spanish Stock Market, in the last three years domestic retail investors have reduced their portfolio of Spanish listed shares. Their participation in the ownership of Spanish listed shares reached 19.7% at the end of 2017, again hitting the record low posted in 2008.

Despite this, the value of the net financial wealth of Spanish households (the difference between their financial assets and liabilities) reached a record high of 1.37 trillion euros at the end of last year. This figure is 85% higher than that recorded in 2008, at the start of the crisis, and has reached five consecutive annual record highs since 2013. The increase in the net financial wealth is also a driver of household consumption and is one of the reasons behind the good performance of the Spanish economy in terms of GDP since 2013.

The Spanish Collective Investment Institutions (Investment Funds, Pension Funds and SICAVs) together with insurance companies and other non-banking financial institutions have become the listed share owner groups that have increased their relative position in equities most significantly, reaching 8% of the total in 2017, the highest in five years.

Lastly, the participation of Spanish Banks picked up 2017 by a tenth, at 3.1%, which is 13 points lower than in 1992 (the first year of the historical series recorded by BME) and 6 points lower than in 2007. This trend is a reflection of the impact of the crisis in recent years and the end of the traditional business model of Spanish banking.

According to the report, the ownership structure of companies listed on the Spanish Stock Exchange may be distorted and their attractiveness reduced if the Government finally implements the financial transaction tax. "In such a global and competitive environment as the current one, this measure generates distrust in the investment community, will bring about inequity, tax arbitrage with other neighbouring countries and could pose a threat to the financial structure of the major Spanish companies, which are the fundamental pillars of the competitiveness of our economy abroad," concludes the study.

The complete report (in Spanish only) is available through this link:

https://www.bolsasymercados.es/esp/Estudios-Publicaciones/Documentos/Estudios-Reportajes