Spain’s IBEX 35 index is soaring, helped by these high-flying stocks

Spanish stocks are roaring in 2024 as investors continue flocking to European equities. The IBEX 35 index jumped to a high of €11,132 this week, its record high. It has soared by over 10% this year and by 90% from its lowest level in 2020. The index has risen in the past five straight weeks.

IBEX chart by TradingView

IBEX 35 index has hit a record high

IBEX is not the only European index that is doing well. As I have written before, the Stoxx 50, Stoxx 600, CAC 40, FTSE MIB, and DAX indices have all jumped to a record high. This rally has been broad-based, with equities in most sectors soaring.

These indices have jumped as investors remain hopeful that the European Central Bank (ECB) will start cutting interest rates earlier than the Federal Reserve. Data published this week showed that the bloc’s inflation dropped to 2.4% in March and is slowly nearing the ECB target of 2.0%.

Meanwhile, Spain is one of the best-performing economies in Europe, helped by a surge in tourism arrivals in the country. The most recent data showed that the economy expanded by 2.0% in the fourth quarter.

Further, investors believe that the IBEX 35 index is still one of the most undervalued indices in the market. It has a price to earnings (PE) ratio of less than ten, which is much lower than the S&P 500 index’s 23. 

The IBEX 35 index is also much undervalued compared to other European indices. For example, the DAX 40 index has a PE multiple of 19 while the CAC 40 index has a multiple of 13.  

Spanish banks have soared

Many IBEX 35 constituents have been in the green this year. Banco de Sabadell stock price has jumped by more than 36% this year, helped by its strong financial results. The company, which is the fourth-biggest bank in Spain, had a Return on Tangible Equity (RoTE) of 11.5% in Q4 as its net profit jumped to over €1.3 billion.

Other Spanish banks have been the best-performing companies in the IBEX 35 index. BBVA shares have jumped by over 34% this year while Caixabank, Santander, and Bankinter have jumped by more than 20%.

Indra share price has jumped by more than 35% this year, helped by the strong demand of the defence industry as global tensions rise. The company also partnered with Thales, another big defence contractor. The other best-performing companies in the IBEX 35 index are Repsol, Mapfre, and Inditex. 

Not all companies in the IBEX 35 index have risen this year. Solaria stock price has collapsed by more than 47% this year as concerns about the solar energy industry has risen. There are concerns that Europe’s solar industry will not survive because of cheaper imports.

The other top laggards in the IBEX index are Grifols, Naturgy, Acciona, Cellnex, and Amadeus have also retreated sharply this year.

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