To find a worse start to the year in the IBEX 35 we must go back to the darkest hours of the crisis of 2007 and 2008. The benchmark index of the Spanish Stock Exchange goes back 12.3% so far in 2020, although this photo was radically different just over two weeks ago. The Wednesday, February 19, marked its annual highs above 10,000 points, maximum since May 2018 and, taking into account its twin index that incorporates dividends, the highest level in its history. From that day on, the disaster.
The dimming economic forecasts due to the fall in tourism, supply interruptions and the stoppage of activity Commercial have created a cocktail that has finally infected the markets. The Ibex 35, the Spanish reference, accumulates a collapse of 16.9% since 19-F, a full-blown stock crash due to the speed of its deployment and its magnitude. The index yielded 3.54% in the session this Friday, up to 8,375.6 points, which represents a new minimum in the current stock market crisis that takes it to levels of December 27, 2018. Weekly balance is also negative: a 3.9% drop that adds up to 11.7% the previous week, the worst since 2010.
Beyond the percentages, its translation into cash and sound money is huge: only the 35 companies in the IBEX 35 have lost in these twelve stock market sessions 107,000 million euros of capitalization, almost one fifth of the total: on February 19 they added a stock market value of 634,473 million and, at the end of Friday, ‘only’ 527,404 million. The rhythm, devastating: more than 1,000 million euros for every hour the Stock Exchange has been open, or 17.5 million per minute.
Like everything else, losses have gone through neighborhoods. In proportional terms, in percentage, the worst has taken IAG, the consortium of airlines that own Iberia, Vueling and now also Air Europa. Its shares have fallen 35% (-5.8 billion) since February 19. Behind, the hotel Melia (-26%, -445 million), the steelmaker Arcelor Mittal (-25%, -3,951 million), Bankia (-23%, -1,229 million) or the flight booking platform Amadeus (-23%, -7,306 million).
In order of capitalization losses, Inditex, owner of Zara, has yielded 16,207 million euros (-16%), Santander Bank another 14,424 million (-22%), while BBVA It is placed third in this ranking of red numbers with -7-628 million and a 22% accumulated fall. Investor sales have been indiscriminate, hence the coincidence of the two banks with Telefonica, which also drops 22% in twelve sessions and loses 7.5 billion capitalization in the stock market. Ten values fall between 20% and 23% over the course of the 12 stock market sessions.
Esty Dwek, director of global strategy for Natixis Investment Managers Solutions, warns about the economic consequences of coronavirus expansion. “The downside risks remain, since we still do not know the extent of the impact of the outbreak on growth, which causes a lot of fear in the markets. (…) Volatility is here to stay,” he says. In this sense, The VIX index has skyrocketed to levels not seen since 2011 in the midst of the euro crisis that ended with the rescue of countries like Spain, Portugal, Greece or Ireland. Dwek also leaves some room for optimism and considers that “the stimulus measures already announced and, those that are yet to come, will help the growth of the whole year 2020 not to go astray completely”.
A historical week also ends from the point of view of monetary policy. In an action not officially coordinated, but successive and subsequent to the G7 meeting, several central banks have acted with interest rate drops. The US Fed, at the helm, Australia, Hong Kong, Canada and even Argentina He has chosen to reduce the price of money to combat the effects of the coronavirus on the economy. Their movements partly explain the strong rebounds recorded in the stock market during the week, although in the end they have been eclipsed by fear of the crisis. “The market begins to call into question the effectiveness of monetary measures, which seem insufficient to cope with the economic slowdown caused by the coronavirus, especially with regard to the “shock” of supply, whose solution / possible compensation would rather go through more fiscal support, “explain the analysts of Rent 4 in a report