In what once again seems the concurrent theme for 2017, is that of politics engulfing financial assets and thereby hugely affecting performance to the downside.
Having seen various EU nations and their governments producing relative stability in the political arena circa 2000 to 2016. Spain now becomes the latest victim of populism, spreading to the Catalan region with a vote (albeit technically Illegally) for independence and succession from Spain.
With some reports that the Catalan region accounts for up to 20% of Spain’s GDP, the financial stakes are huge. However can the recent performance of Spain’s leading index, the IBEX, be attributed to this vote or are there other underlying issues for the Spanish economy? If we compare the IBEX from the beginning of 2017 to the DAX, Spain’s leading index is up 9%, whilst the DAX over the same period is up 13.6%. If we also look into the moves closely the DAX is currently at its all-time high, whilst the IBEX is noting almost 1000 points below it’s high of 11185 reached earlier in May this year.
With political wrangling still ongoing between the Catalan region and the Spanish government, I fear investors will continue to trade with trepidation when investing in Spain’s leading Index
Jordan Hiscott, Chief Trader
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