Take 5 and come back tomorrow (2/4/24) Markets Taxes ACS Banks Real Estate
The view from my window

Take 5 and come back tomorrow (2/4/24) Markets Taxes ACS Banks Real Estate

None of what follows is investment advice.

Market environment: Working out interest rate prospects - (Asia-Pacific markets were range bound with European futures mildly up and those for the US moderately down) – Asia-Pacific markets were range bound as investors analysed the chances of a Fed rate cut, with focus on the jobs market. Futures for Europe are mildly up and those for the US moderately down.

Response to the crisis: Boosted by temporary factors - (Tax collection rises over 6% YoY in the first two months of the year, in part due to the normalisation of taxation on energy consumption (Expansion p20)/The Government revises up the minimum payroll tax by 5% (Expansion Fri p28) – Tax collection continues to benefit from the impact of past inflation as well as removal of some of the cuts in VAT applied to electricity sales from the start of the year. Both are factors that should not be long-lasting. Raising the minimum payroll tax is a further measure that should erode the competitiveness of Spain’s economy.

ACS: Loss of value - (ACS and Abertis at risk of losing their largest motorway concession (SH-288 in Texas) which the local authorities have an option to buy back at a price of €1.6bn (vs. the €2.5bn valuation at which Abertis bought a 57% stake from ACS last year) (Expansion Fri p3) – The media had already reported on the risk of the concession being bought back. This should have a negative impact, given that the price would be below the last valuation via what was essentially an intragroup transaction.

Banks: Business as usual - (The Euribor interbank rate rises to 3.71% in March (vs. the 3.571% of February) but anticipates that the worst is over (Expansion Fri p17)/Lending to households fell 2.1% YoY in February and 1.4% to corporates (Expansion p15)/Assets under management in Spanish investment funds rise by €15.208bn in 1Q24 to €363.212bn, with €almost €7bn in net subscriptions (€2.2bn in March), with strong appetite for conservative funds (Expansion p18) – Interbank rates still rising in the short term should be a positive for NII even if the medium term trend is down. The growth in investment fund assets under management should also be positive, even though being centred on conservative funds this should have less of an impact on fee income. The decline in lending is logical given the rise in rates and could change if the situation reverses (see following comment).

Real Estate: The price of growth - (According to a Sociedad de Tasación survey optimism in the sector has improved due to expectations of interest rate cuts by the ECB which should lead to an increase in activity and prices (Expansion p22) – A cut in interest rates by the ECB should boost the real estate sector by making variable rate mortgages more affordable. If the higher affordability were to be translated into higher prices this would eat into the potential for increased activity.


To view or add a comment, sign in

Insights from the community

Others also viewed

Explore topics