XTB analyst Manuel Pinto states that the announcement of early elections has little impact on the IBEX 35, which relies more on interest rates. In February 2019, the index rose by 1.91% on the day of the announcement.
The collapse of the two housing decrees in Congress has reopened the possibility of early elections in Spain. In this context, XTB analyst Manuel Pinto has analysed on the programme La Linterna of COPE how the markets would react to a scenario of early elections.
According to Pinto, the announcement of elections does not in itself have a significant effect on the IBEX 35. "The truth is that, as history tells us, the announcement of early elections does not have a significant impact on the IBEX 35; it depends more on interest rates," said the analyst, who noted that listed companies increasingly derive a larger portion of their income from abroad.
The truth is that, as history tells us, the announcement of early elections does not have a significant impact on the IBEX 35; it depends more on interest rates
The analyst recalled precedents in the Spanish index. In February 2019, following the rejection of the budget, the IBEX 35 rose by 1.91% on the day of the announcement of early elections. In May 2023, the index fell by 0.12% on the first day, but five sessions later it was trading 1% higher.
The moments of greatest instability for listed companies have occurred when government agreements have been confirmed. Pinto pointed out that the most significant drops were recorded with coalition agreements, such as the pre-agreement of November 2019 between PSOE and Unidas Podemos, when the IBEX 35 lost 0.87%, or in October 2023 with the pact between PSOE and SUMAR. On those days, entities such as Bankia fell nearly 5%, CaixaBank 4%, and Sabadell more than 5%.
The lack of regulatory visibility directly impacts investment decisions. "A company may even decide to postpone a potential investment because it does not know what taxes it will pay, it does not know under what regulation it will operate," warned the XTB specialist.
A company may even decide to postpone a potential investment because it does not know what taxes it will pay, it does not know under what regulation it will operate
Among the sectors most sensitive to these shifts are banking, energy, real estate, and data centres. Regulation on rental or banking solvency requirements determine credit and available dividends. The lack of budgets complicates the management of around 80 billion euros transferred from one item to another, as highlighted by Antonio Garamendi, president of the CEOE.
In the last session, despite the political instability, the IBEX 35 opened with a rise of 2%.
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