Editor’s note: This article was first published in May 2012 as a market report from 9 May 2012. The share price moves, target-price cuts, planned bank provisions, Greece’s threat to leave the euro and the French vote against austerity all refer to that day.
After several calm days in what is now considered the least profitable index in the world, IBEX stocks have taken another tremendous tumble, dragged down not only by fears that Bankia will be nationalized but also by renewed doubts about Spain’s financial system.
Banks took centre stage on every European stock exchange, but the Spanish financial system has painted a target on its back: few people today would believe that we have the soundest, most solid financial system in Europe.
Europe back to square one, Spain a little further back
That’s the feeling right now. All the money injected into the banks so far has been insufficient, though I would rather call it useless, not to say money down the drain, since it would have been cheaper for us to let some banks fail (with all the consequences).
On top of that comes Greece’s threat to leave the euro. The markets no longer trust austerity measures, and they trust a Europe with little austerity even less, so we could say that even France’s NO to austerity policy has hit us.
Early this morning we learned that the Government will force the banks to make a new round of provisions worth between 20 and 40 billion euros. Later, the Prime Minister announced that he could turn to the European Investment Fund to inject money into the FROB (Fund for Orderly Bank Restructuring), because there would not be enough. In other words, a new financial bailout plan may be in the works. In short: public money, once again, for that chronic patient called the financial system.
JP Morgan also made the news by sharply cutting its target price for Bankia, while Morgan Stanley lowered its target prices for practically every bank in Spain.
The big losers of today’s session were Gamesa, which presents its results tomorrow (and they are not expected to be very good) and shed 6.96%, slightly more than Bankia, which closed at -5.84%, while CaixaBank ended at -6.69%.
The other big loser was Mapfre, which closed at -6.27% after presenting some very unattractive results today.
The only two winners of the day were Técnicas Reunidas, which closed up 3.14% after announcing a contract in Canada, and Acerinox, up 3.07%.
In short, the IBEX has become a complicated market within a complicated eurozone. Meanwhile, on the other side of the ocean, we keep watching the big giants hit new highs on the stock market.
Featured image: Chris Yunker from United States, CC BY-SA 2.0, via Wikimedia Commons.
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