Spanish Stock Market: Perspectives for 2019

Spanish Stock Market: 2018 has been a tough year for investors in the Spanish stock market. IBEX 35, the index with the most important stocks in the Spanish market, has been going down since January 2018, and now many investors could think it is cheap enough to buy. What is our opinion? Let’s take a look.

Before we start, we want to make clear that this blog post is not intended to give financial advice to anyone. This is a personal analysis that may serve you identify some aspects that you may want to include in your own analysis. However, if you need help to make your decisions, ask your financial investment advisor.

Technical

If you look at graphics, the index is making lower lows each time, so nothing seems to show that the trend is going to change. Remember that while our perceptions are subjective, a graph allows us to set supports and resistances that are more or less objective. As things are now, it seems possible that we will reach the low of 2016 (7,800 – 7,600 points). Does this mean someone should buy it when it reaches these levels? Not really – if you follow technical analysis you should wait to see a figure that suggests a change of tendency, and if you want to keep your heart healthy, check that the trend has really changed, creating some higher lows and tops.

The index has lowered a lot, which could mean some rebounds in the short term, but this is a lost battle for the average investor. The best way to invest your money when something is falling is to keep your cash until the assets are starting to raise, and invest in a confirmed trend. You will not become rich, but the risk will be significantly lower.

Fundamental

We cannot know what will happen with the company results in 2019. Following the Economy Minister, the GDP will grow 2.8 % in 2019, but she also announced that the government will review the forecast after they study the results of the last three months.

What we know is that 2019 has some political risks in Spain related with the elections. There will be election in municipalities and most of the autonomous communities, besides of the ones in European Union. With the rise of the so-called populist parties, the markets may suffer. The fact that there will be elections is also relevant, because it creates doubt about politicians’ positive statements, since they will rarely forecast bad results that may mean voters punish them by voting for others.

Spanish Stock Market Conclusion

The temptation of buying a stock at the lowest point to enjoy a nice rally may be big, but in this moment the risk is extremely high. As average investors, we would try to join the trend instead of trying to forecast when it is going to change. Doing so and using an accurate stop loss, it should be easier to achieve an investment system with positive results.

We don’t know what will happen in Spain, but if 2018 has been difficult, nothing seems to have changed for now apart from the number of the year.

15th March 2019
//Spanish Probate Matters

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