Little more than a month ago, on September 12 to be exact, the Ibex 35 hit its annual low point of 7,640.7 points. According to experts, this main indicator of Spanish stocks will not sink back to these levels again for the rest of the year despite small declines such as yesterday.
Since an ominous September 12, the Ibex has experienced a rebound of 17% and all indicators suggest that this figure will continue to rise through year end. "The end of the year rally has just started, considering that resistance of risky shares and supports of secure shares have been hit consistently. We understand that the markets will look for new levels of resistance. For the Ibex that is 9,200-9,400 points," said Miguel Paz from Unicorp.
Investors could be flocking back to the markets for any number of reasons: good deals on shares, secure companies offered at minimum values, etc. But there is one reason in particular to keep in mind. The European Central Bank (ECB) and European governments will do everything possible to guarantee that their banks are liquid, even if they have to go through with a debt forgiveness plan for more than 50% of Greece?s liabilities. "Although politicians might not meet all their obligations, the simple lack of bad news would be sufficient for us to realize a sure recovery," affirmed Juan Ramón Caridad, director of Swiss&Global in Spain.
Further, institutional investors are easing into the market. Hedge funds "have to make some clear directional bets because they are 5% behind and they know that their clients will not tolerate much disappointment."
