Euro Crisis: Is Spain Next?

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Sure, it’s easy enough to read the latest headline articles and feel informed on all things global, but Marc Chandler of Marc to Market thinks there are a few things non-European citizens need to know about what’s really going on across the pond.

In failing to grasp the goings on in Europe, we may have missed several significant observations, in particular those regarding Spain, which has an upcoming election.

What’s new in Spain

The fiascos in Greece and Italy have largely stolen the headlines and derailed attention from Spain, but not for much longer. Spain’s 10-year yields are again moving above 6% today, following the footsteps of Italy. It maybe “a taste of things to come” as they head closer to the level of junk bonds.

“Spain’s economy stagnated in Q3 and may be contracting in the current quarter,” adds Chandler. “The government’s growth forecasts need to be cut, as the EU did last week (the EU forecasts 0.7% this year and next and the 2012 forecast may be on the high side). This means that it is likely to overshoot this year’s deficit target of 6% by a wide margin (10%) and unless substantial more savings are found it, it will overshoot next year’s deficit target by a wider margin.”

Spanish Austerity

Spain is also up for nation elections on November 20th. The People’s Party (PP), the largest opposition party in the Congress of Deputies, will likely achieve the best outcome and speculated to secure as many as 200 or the 350 senator seats. However, Marc argues their policies will likely be along the lines of more austerity measures to bring the country’s deficit on track.

But tougher austerity measures in Greece and Italy have arguably made the new governments “reflect a greater part of the elites than the previous governments and in this light considering it ‘technocratic’ does not do justice to what is happening.” These austerity policies are associated with a sharp decline in the standard of living, and are largely the focus of the famous Greek protests in Athens. Could Spain soon find itself in a similar position?

Investing Ideas

Want to keep an eye on developments in Spain? To help you monitor the situation, we’ve compiled a list of the four Spanish stocks trading on U.S. markets.

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

We’ve sorted the list by performance over the last month.

1. Telefonica, S.A. (TEF): Telecom Services Industry. Market cap of $86.26B. Provides fixed and mobile telephony services primarily in Spain, rest of Europe, and Latin America.. Share price as of 11/15 at $18.62. The stock has lost 15.63% over the last year.

2. Banco Santander, S.A. (STD): Foreign Money Center Banks Industry. Market cap of $64.23B. Provides a range of banking and financial products.. Share price as of 11/15 at $7.55. The stock is currently stuck in a downtrend, trading -8.07% below its SMA20, -6.4% below its SMA50, and -24.54% below its SMA200. The stock has lost 29.47% over the last year.

3. Banco Bilbao Vizcaya Argentaria, S.A. (BBVA): Foreign Regional Banks Industry. Market cap of $39.81B. Engages in the retail banking, asset management, private banking, and wholesale banking businesses in Spain and internationally.. Share price as of 11/15 at $7.99. The stock has performed poorly over the last month, losing 10.28%.

4. Grupo Prisa SA (PRIS): Entertainment Industry. Market cap of $843.84M. Operates as a multimedia company in Spain and internationally.. Share price as of 11/15 at $4.07. The stock has performed poorly over the last month, losing 15.25%. 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: TEF , STD , BBVA , PRIS

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