The value of the exits on the stock market drops by 80% due to political instability

The value of the exits on the stock market drops by 80% due to political instability


The Spanish parquet is living in 2018 its particular «annus horribilis». The political instability that has reigned inside and outside our borders has paralyzed a good number of IPOs in recent months. In the absence of the completion of the fourth quarter, Only Metrovacesa has managed to take forward its public sale offer (opv). As a result, according to the data of Bolsas y Mercados Españoles (BME), the volume captured by the new operations in the Spanish Stock Exchange between January and September has been reduced by 80% compared to 2017, from 3,348 million euros to 645.

The last one to postpone its long stock market launch has been Cepsa. Last Monday, 24 hours before the price of the operation was fixed, Mubadala, the sovereign fund linked to the United Arab Emirates and sole shareholder of the oil company, sent a statement in which it indicated that it was suspending the opv because «The instability suffered by the markets it affects the company's valuation "and" the lack of appetite "of the investors.

Likewise, The so-called Arima has delayed and reduced its offer (from 300 to 100 million) to carry out its IPO, which will finally take place tomorrow.

Before them, real estate companies like Via Célere and AzoThey have already suspended their IPOs. Testa, which today represents the first rental company in the country, had to settle for listing on the MAB (Alternative Stock Market) instead of on the Continuous Market. An uncertainty that is explained in part by the result that Metrovacesa has had after its debut. "Its results have not been very positive and, currently, it is still 30% below its starting price, affecting the rest of Spanish opv, mainly because several of the exits that were expected for 2018 were from the same sector", notes Fernández Funcia, partner in charge of Capital Markets at PwC.

It seemed that the market swings were being reserved exclusively for the brick sector, which has already left behind the low levels it started in previous years. However, the delay of Cepsa's opv – which had been profiled as the largest IPO in Spain in the last two decades – has shown that investor appetite has also been held back in other areas of the Spanish economy.

«The negative behavior that the stock market is registering in the last weeks makes investors expect a better situation to launch their offers », explains Natalia Aguirre, director of analysis and strategy of Renta 4. "The public impact caused by a bad exit to the stock market makes companies think twice, although sometimes these processes take up to a year," he adds. Darío García, from the "broker" XTB.

Fall of 11.5% in the year

The truth is the Spanish stock market accumulates a fall of 11.47% in so far this year. And is that the signs of economic slowdown have conditioned a selective that had already been reduced by the external situation. Do not forget that the situation of countries like Argentina and Turkey have weighed on the Spanish banking. A sector that, in addition, still is pending of the position that the Supreme one takes in mortgage matter.

The instability of the Government has not helped either. As Garcia explains, "equity investors do not agree with the policies that the Executive is implementing in fiscal and budgetary matters."

With everything, the situation of the rest of the European indices is not much more favorable. According to the European Observatory of PVOs prepared by PwC, between July and September of this year there were 64 IPOs in Europe with a value of 3,900 million euros. A figure 53% lower than those registered between July and September last year, months in which 76 deals were recorded on the stock market that allowed to attract 8,300 million euros.

The forecasts for the next months are not at all flattering. "During the first weeks of this semester there have been numerous IPOs at European level, but the joy did not last long as the markets started to fall and the volatility to increase. Not only has it affected possible transactions, but also many who had not yet made their plans public and who have now decided to wait until 2019 and better market conditions, "says Fernández Funcia.

On the positive side, the PwC expert points out that "MAB has experienced certain levels of activity, thus providing an opportunity for investors" interested in our country.

Bait for bassists

Beyond the operations that have been canceled, the current levels of the Spanish stock market can attract bearish investors, those who bet against the stock market rises.

Natalia Aguirre points out in this sense that the market is very aware of the next report that will be published on October 29 by the National Securities Market Commission, which will reflect the percentage of shares currently held by this type of investor. Especially relevant will be to know the position that bear the bear in Dia, which has suffered a stock market debacle this week.


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