Spanish government begins to make up for lost time

October 24, 2016

The country's Socialist Party will allow acting Prime Minister Mariano Rajoy a second term, ending 10 months of political deadlock. His minority administration will now begin arduous tasks like cutting the budget deficit as the economy slows. A fractured parliament won't help.

Brussels O2 veto cements BT’s home advantage

May 11, 2016

The EU’s anti-trust tsar has rejected CK Hutchison’s 10.3 billion pound takeover of O2, because it says it would raise mobile prices. That leaves several UK players figuring out next steps. In an industry moving towards packages of mobile, landline, broadband and TV, the winner is the beefed-up BT.

Spain at risk of a lost year

February 5, 2016

The country’s political parties still haven’t formed a government seven weeks after an inconclusive election. In the short term, it’s unlikely to have a big impact on the economy. But a prolonged stalemate could hurt confidence and sap momentum, as well as deter corporate deals.

Santander has been punished enough

January 27, 2016

It has been easy to construct a bear case around the Spanish bank based on its Brazilian exposure, weak capital and frail home market. But with shares trading below those of peers, the bad news is already priced in.

Spanish election is vote for malaise

December 21, 2015

The ruling conservatives won the general election but fell short of outright victory. Other than a difficult grand coalition, there is no obvious alliance that would add up to a majority in Parliament. The uncertainty bodes ill for Spanish regulated stocks.

Inditex is priced for perfection

December 10, 2015

Shares in the Zara fashion retailer are up some 35 percent this year, against a 7 percent fall for rival H&M. Inditex’s nimble business model and strong double-digit earnings growth explains why. But currency fluctuations could slow its stellar trajectory.

Caixabank finds neat way to conserve capital

December 4, 2015

The Spanish lender owns minority stakes in overseas banks that consume capital and add volatility to earnings. It is selling two of them to its parent for 2.7 bln euros, mostly in its own shares. It’s an elegant workaround. But Caixabank’s tough home market is the bigger problem.

Abengoa has creditors over a barrel

November 27, 2015

The beleaguered Spanish engineering group might survive if lenders take haircuts of two-thirds. In liquidation, losses could mushroom due to the group’s spiralling working capital needs, complex business and slow Spanish courts. Abengoa needs a speedy resolution and more cash.

Barcelona at risk of being the Montreal of Spain

November 13, 2015

The uncertainties surrounding regional separatism contributed to the economic problems of Canada’s second city. The tensions of Catalonian nationalism could also harm its capital city. There’s no clear evidence of exodus yet, but Catalan politicians would be foolish to ignore the risk.

Catalonia’s risky secession threat may backfire

November 10, 2015

The Spanish region’s government has started a process of “disconnecting”, despite a doubtful mandate and a constitution that forbids a referendum. The plan is unlikely to win much international support, but may provoke Madrid into cutting off financing. Investors will steer well clear.