Defensive stock picking
The Spanish stock market closed lower in line with the other major European bourses.10 January 2008
MADRID - The Spanish stock market closed lower in line with the other major European bourses due to gathering gloom about the prospects for the global economy amid the current credit crunch and fears of a recession in the United States.
The banks and construction and real-estate companies took the brunt of the sell-off because of their exposure to the property sector. Figures released yesterday showed growth in mortgage lending in Spain had dropped to its lowest level in 10 years.
Buying interest focused on defensive stocks; that is, those with relatively high dividend payments and recurrent income, such as utilities. The Spanish blue-chip Ibex 35 dipped below 14,500 points at one point but recovered some ground before the close after Wall Street opened higher.
The Spanish blue-chip Ibex 35 closed down 0.46 percent at 14,603.50 points after trading in a range of 14,471-14,655. The Madrid general index lost 0.73 percent to 1,574.88 points. Open-market deals in the continuous market came to about EUR 5.9 billion.
In the rest of Europe, Frankfurt shed 0.86 percent, Paris was down 1.10 percent, while London gave up 1.32 percent.
Colonial led blue-chips lower, shedding 12.08 percent. Apart from the property slowdown, the real-estate firm is facing the double whammy of having to refinance EUR 9 billion in debt.
Medium-sized banks deemed to be most exposed to the mortgage market also suffered. Banesto lost 4.37 percent, while parent bank Santander lost 2.34 percent.
Unión Fenosa added 3.84 percent after leading shareholder ACS announced the previous day it had bought a further 4.83 percent of the electricity firm. Telefónica added 0.35 percent.
[Copyright EL PAÍS / Adrián Soto 2008]
Subject: Spanish news