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Sunday, February 5, 2023

The economic slowdown is removing the bank from the top positions in Capricorn


Investors are torn between celebrating expectations of earnings improvement in the heat of monetary normalization and fiscal changes planned for the sector. Although the bank led gains yesterday, buoyed by rumors that the ECB was discussing a 50 basis point hike, in recent weeks the new tax the government is preparing and the doubts hanging over the economy have reduced euphoria. The course announced by Pedro Sánchez is causing a stir among regulators and weighing on investor sentiment. The correction breaks through, ousting banks from the top positions in the Most Valuable Companies ranking.

Although Santander remains firmly on the podium, confirming its third place with a capitalization of 40,510 million, CaixaBank and BBVA are experiencing a notable setback. The most striking case is the entity controlled by Gonzalo Gortázar. In three weeks, CaixaBank has fallen from acquiring BBVA and establishing itself as the fourth largest publicly traded company (28,900 million) to ninth place with a value of 21,990 million. During the same period, the Carlos Torres-led bank ditched around 1,000 million in the stock market, falling from fifth to seventh with a value of around 26,190 million.

Bankinter and Sabadell are not exempt from this trend, but in contrast to the big three, the decline in the ranking is much more moderate. Two sessions after parading down the results catwalk, the company led by María Dolores Dancausa falls back two steps to become the listed No. 25 with the largest capitalization at a value of 4,280 million, some 1,100 million down from the end of June 24 . For its part, Sabadell continues to wear the label of the bank with the lowest cap in Capricorn (3,550 million) and ranks 27th among the companies in the index, two steps below the level it registered three weeks ago.

The regulatory uncertainty also explains Iberdrola’s loss of first place. Since energy giant Inditex usurped the throne from the most valuable company at the end of March, the company, chaired by Ignacio Sánchez Galán, has worked hard to defend the gold medal at all costs. Its greater resilience to volatility and exposure to renewable energy weren’t enough to weather the shocks this time around. The energy company lost its leadership on June 8th. The rise in funding costs as yields on debt have risen and the tax on the energy sector, where the executive is working to curb inflation, ultimately struck the blow. Last month, the company ditched nearly $7,000 million, reducing its capitalization to $62,760 million.

The opposite side is represented by Inditex. The textile group manages to withstand the increase in inflation and, with the help of the results of the first quarter, the first of the Marta Ortega era, overcome the slumps experienced by the exit of Russia, the second market that contributed the most to the accounts of 2021. From the annual minimums, the company is up 29% in the stock market and its shares recover 25 euros per share, five months maximum. This recovery is not enough to escape the sales of the year (-10.3%), but it has put it in first place on the Spanish Stock Exchange with a capitalization of 75,980 million.

Cellnex, which corrected in the first half of the year taking advantage of the rise in bond yields, is regaining its lost brilliance. Its greater resistance to volatility and its exit from the bid for the Deutsche Telekom towers have pushed it up three positions to fourth place (27,730 million).

Naturgy sticks to the rise in raw materials

from the podium. The rise in commodities has helped to further strengthen public companies like Naturgy. Though the company hasn’t escaped tax hikes the government is preparing, the rise in gas prices in the heat of geopolitical tensions has helped revitalize the company. The publicly traded company climbs to fifth place on the Ibex with a 2.16% gain on the year. At market prices, the gas company is worth around 27,550 million. A step below is Telefónica with a capitalization of 26,640 million.

To weigh. If you look at the weight in the selection, Iberdrola (14.25%) is the listed company with the highest weight. The silver medal goes to Inditex (10.85%). The textile group holds 60% of its shares because Amancio Ortega and his daughter Sandra control over 66%. This is in contrast to Iberdrola and Santander, which are weighted at 100% of their capital.


Source elpais.com

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