Household investment in the Spanish Stock Exchange rose to 17.1% after a five-year decline

• Non-resident investors concentrate 49.9% of the market according to the data from the end of 2020, three-tenths less than the all-time high reached in 2019
• The Bank of Spain anticipated a drop of six-tenths in non-resident participation at the end of April 2021 that could show the negative effects of the Financial Transaction Tax

Households increased their ownership of listed stock last year and foreign investors continue to own nearly 50%, according to the Annual Report on Ownership of Listed Stock in Spanish listed companies prepared by BME Research Department. This is the twenty-ninth year that this report has been published uninterruptedly.

The participation of individuals in the stock market stood at 17.1% in 2020, one point higher than the previous year, breaking a streak of five straight years of decline. Despite this upturn, there has been a downward trend for just over five years as a result of the growing weight of investment funds in portfolios due to their advantageous tax treatment and the commercial commitment of the marketing entities. According to the latest Survey of Household Finances conducted by the Bank of Spain in 2017, 2.14 million households owned listed stock, i.e. around 12%.

The participation of international investors remains very close to all-time highs. At the end of last year, they controlled 49.9% of the market capitalisation, three-tenths less than the previous year when the all-time high was reached. In one-decade, foreign investors have increased their weight in the Spanish Stock Exchange by more than ten points. Among them, most of them international, the Norwegian Global Pension Fund stands out, a sovereign wealth fund whose investment in companies listed on the Spanish Stock Exchange is over 12 billion euro, spread over more than 80 Spanish listed companies.

On the other hand, the share ownership data provided by the Bank of Spain for the end of April 2021 anticipates a drop of six-tenths of a percentage point in the participation of non-resident investors.

The Report prepared by BME points out that this decline could show the tax penalty that Spanish listed shares have suffered due to the Financial Transaction Tax (FTT) that has been applied since January. “A competitive taxation of Spanish financial assets would allow our economy to take advantage of strongly growing international capital flows in recent years and thus leverage the effect of the European Recovery Fund,” says Domingo García Coto, director of BME Research Department.

Trends

Non-financial corporations are once again the second largest group owning Spanish listed shares in 2020 with 21%, two-tenths more than the previous year. In the six years since 2014, the stake held by this group of investors has grown by four percentage points, but is still far from the all-time high of 26.1% reached in 2010.

Collective Investment Institutions insurance and other non-bank financial institutions controlled 6.4% of the market capitalisation at the end of 2020, nine-tenths less than the previous year. The historic high was reached at the end of the 20th century, when it accounted for 10.2% of the total value of the Spanish Stock Exchange.

The Spanish public sector controlled 2.9% of the market value at the end of last year, one-tenth more than the previous year and for the first time since 1998 leaving the last position in this ranking of share owners. While its stake was 16.6% in 1992, by the end of 1998 it had fallen to 0.6%. In 2013, it rebounded to 2.3% because of the public aid received by some banks (Bankia in particular) due to the financial crisis. It is precisely this crisis that has led the banking institutions to be the group with the lowest weight in the stock market, 2.7%, despite being the third largest owner in the nineties, with 15.6%.

The complete report in available here:
https://www.bolsasymercados.es/ing/Studies-Research/Recommended-Contents