By Javi West Larrañaga
(Reuters) -Spain’s blue-chip index IBEX 35 on Tuesday hit a new record high, surpassing its previous peak in November 2007, closing a year in which it has outperformed every major European equity market, driven by a strong economic environment.
The index, which rose by as much as 0.3% on Tuesday to a high of 16,054 points, has gained 38% since the beginning of the year, compared with the 14% gain in the Europe-wide STOXX 600.
The IBEX fell from its previous record high on the eve of the global financial crisis and it is one of the last of the larger European indexes to have fully recovered from that slump.
In contrast, Germany’s DAX and Britain’s FTSE 100 bounced back to their pre-crisis 2007 levels in 2013, while France’s CAC 40 did so in 2019.
BANKS, BANKS, BANKS
The bank-heavy IBEX 35 has been buoyed by a remarkable performance by domestic lenders so far this year, with Spanish banks outpacing already vigorous growth in the broader European sector.
Shares in Santander, the euro zone’s biggest bank by market value, have risen around 90% this year, while its competitors in the index have risen between 67% and 82%.
They have benefited from a strong macro environment in the country and improved balance sheets since European governments agreed to bail out Spain’s banking system in 2012.
Moreover, Spanish banks have an additional upside compared to their European rivals, said Christophe Hautin, equity portfolio manager at Allianz Global Investors.
“They are not only nicely exposed to a strong dynamic domestic market, but also to additional growth potential coming from Latin America”.
At around 42,900 points, Italy’s blue-chip index is still a bit shy of its historic record of 44,364 in May of 2007.
(Reporting by Javi West Larrañaga; Editing by Amanda Cooper)
