Three days before the end of the year, Unicaja will enter the Ibex 35. The entity will occupy the position left by Siemens Gamesa after the exclusion bid launched by Siemens Energy. With the disembarkation of the entity chaired by Manuel Azuaga in the selective, the reference index of the Spanish Stock Market again has six representatives of the banking sector.
The arrival of Unicaja to the Ibex 35 will be one more grain of sand that will help the bank to recover part of the lost shine. After years in which the era of cheap money has eroded banks’ margins, the accelerated rise in rates is helping to boost the business of banks while boosting their share price. The entities manage to leave behind the hardest moments of the pandemic and with the arrival of Unicaja their capitalization increases by 29,328 million in two years. In addition to recovering the barrier of 100,000 million, the capitalization of the firms is steadily approaching the level of 124,000 million. Despite this recovery, it continues to be below the levels prior to the outbreak of the pandemic (129,511 million).
BBVA and CaixaBank are mainly responsible for this increase. At the end of 2020, the stock market value of the entity chaired by Carlos Torres amounted to 26,900 million, 6,604 million less than the current 33,509 million. CaixaBank, which completed its merger with Bankia last year, reaches a capitalization of 29,139 million. In other words, it is behind Santander (47,234 million) and BBVA. Adding the value on the stock market of CaixaBank and Bankia, the capitalization at the end of 2020 was around 17,286 million. That is, in two years its value has increased by 12,124 million. The entity chaired by José Ignacio Goirigolzarri is one of the most benefited by the rate hike due to its strong exposure to the mortgage business.
Despite this comeback, the bank continues without recovering the throne of the most valuable sector of the Ibex. This position continues to be reserved for energy companies. Although in recent sessions it has lost a member (Siemens Gamesa) with the entry of Acciona Energía it manages to maintain seven representatives.
While the banks are the listed companies that get the most out of the rate hike, the utilities and companies linked to clean energy are the most affected. This, together with the rally that they accumulated in the toughest moments of the pandemic, has resulted in a drop in capitalization of 16,618 million. With cut included, the joint capitalization reaches 139,000 million. That is to say, it maintains the throne of the most valuable sector of the Stock Market.
Although the energy companies are characterized by being companies with recurring income and high dividend yield, the increase in rates has taken its toll on them. The rise in debt yields has allowed bonds to leave the lows. Investors with a lower risk tolerance are looking askance at fixed income that is beginning to offer attractive coupons. These come into competition with the dividend yield.
But more than the dispute between dividends and coupons, what has passed the most bill to energy is the rise in the cost of financing. The end of zero rates has made loans more expensive and forces companies to pay more to raise resources. This is especially significant in highly indebted firms such as electricity companies that have to undertake heavy investments to provide their services. As a shield, many resort to the strategy of referencing the bulk of their liabilities at fixed rates. An example of this current is Iberdrola, with 75% of its liabilities at a fixed rate.
Iberdrola, the listed company with the most weight
Weighing. Iberdrola is in constant competition with Inditex to win the title of the most valuable listed company on the Spanish Stock Exchange. The electric company has managed to seize the throne on several occasions, but today it is one step below with a capitalization of 68,770 million, compared to the 76,480 million of the textile group. What the company chaired by Ignacio Sánchez Galán continues to maintain is the listed medal that weighs the most in the selective. Its weighting reaches 15.8%, compared to 10.57% for Inditex. This is because the textile firm weights for 60% of its shares, since Amancio Ortega and his daughter Marta control more than 66%, while Iberdrola weights for 100% of its capital.
Santander. Below Iberdrola is Santander, with a weight of 10.87%, and already off the podium are BBVA (7.7%) and CaixaBank (6.7%).
#CaixaBank #BBVA #boost #capitalization #Ibex #banks #million