At the beginning of March 2020, covid-19 was a simple flu, a respiratory illness that only caused complications in elderly and vulnerable populations. “There will be no more than one diagnosed case in Spain,” said Fernando Simón, coordinator of the Center for Health Emergencies, on 31 January 2020. But the markets were not calm. In the last weeks of February, the Spanish stock market lost 10,000 points. It was February 19, 2020 and today that level has not yet been reached. In the last session before the close of this edition, the Madrid parquet rose 0.44% to reach 9,278 points.
The ‘assets’ have been compiled to put numbers in the cocktail that has meant that Ibex 35 companies have faced a global pandemic over the past three years, a fierce war on European soil and a banking crisis. The value of the titles of the main business groups excluding dividends is compared with the value registered as of 2 March 2020 and 3 April 2023.. Some companies gained strong value, including ArcelorMittal (+18%), Solaria (+88.73%) and Acciona (58.70%). The increase in raw materials is behind the progress of steel and energy companies. In the case of Solaria, which has nearly doubled in price over the past three years, anger over the explosion of renewable energy and the self-consumption of solar energy with panels has fueled its business. However, pharmaceutical company Grifols suffered a strong depreciation (-70%), while IAG (-49.09%) and Colonial (-49.48%) finished the podium with the worst performance.
In the same period, the selector increased by 4.76% from 8,741 points to 9,157. To put it in context, Inflation was 14% between February 2020 and February 2023According to data processed by the National Institute of Statistics (INE).
A global challenge
The COVID pandemic has challenged the economy and governments around the world. Most of the countries have taken the decision of house arrest for the first time to prevent the spread of the virus. Specifically, in Spain, Non-essential economic activity was paralyzed, and plans were made to compensate employees who were absent from work.. They were the famous postponements that represented the State’s injection of up to 25,900 million into the economy between March 2020 and January 2022. The sectors hit the hardest as a result of these mobility restrictions were leisure and tourism.
In the stock market this turned into significant losses for Ibex tourism companies: Aena, Amadeus, IAG and Melià. The only Aena to record a positive balance between March 2, 2020 and April 3, 2023 (+3.59); Amadeus was down 1.7%, while Melià was down 2.61%. The biggest loser in this group was IAG, the airline whose share depreciated by 49.09%.
“The business model of these companies has been the most impacted. In the IAG example, the market predicts earnings per share will continue to decline in the future.“Tressis’ head of equity, Víctor Álvarez. High oil prices have also been a significant setback for the airline conglomerate. “We were hit hard by the transport restrictions, although demand recovered 87% with the economic reopening,” company sources explain, citing debt incurred during the Pandemic. Pointing out, the airline closed the 2022 fiscal year with a net debt of 10,385 million euros, according to the final report.
Other big losers during this period were Ibex real estate companies. Merlin Properties lost 49.09%, while Colonial stock dropped 49.48% of its value.. “The prospects for this sector are negative. There is pressure in the market to lower housing costs and there is an increase in raw materials,” said Bankinter analyst Juan Moreno. Real estate companies have high debt because so much of their business is financial, and they attribute that debt to their productive assets. Therefore, the increase in interest rates especially affected such companies.
There are experts who point out your important office work. “Besides the increase in interest rates, teleworking has affected them. To all this we must add that they are companies that devote a large part of their profits to paying their shareholders”, explains Manuel Pinto, analyst at XTB brokerage firm. Colonial plans to dedicate 77.5% of profits to shareholder remuneration and 71.4% to Merlin in 2023.
Grifols disaster
Pharmaceutical Grifols is the value of Ibex that loses the most in the date selection made by ‘assets’: it accumulates a 70% loss. The company has recently been characterized by governance issues. Last February, the board announced that Steven F. Mayer was replaced by Thomas Glanzmann. The official reason for this change was Mayer’s health and personal reasons that prevented him from carrying out the company’s compliance plan, which would mean the layoff of 2,300 workers worldwide. “They have certain corporate governance issues, but their business is attractive and the drugs are generally of defensive value”says José Miguel Fernández, an analyst at Beka Finance.
From an unknown laboratory specializing in blood therapy, a One of the largest stock market values in Spain grew based on acquisitions and international expansion. In April 2022, Grifols made the most controversial acquisition: it bought the German company Biotest for 1.413 million. The company’s debt has grown to over 9,000 million, which already represents nine times its EBITA (earnings before interest and tax). “Within Ibex, one of the most indebted needs to lower its indebtedness level as its current activity does not justify these numbers. I know that is very much in mind,” says director Juan José Fernández-Figares. The analytics department at Link Securities
Additionally, an already withdrawn demand for ex-blood donors in the United States and complicates the image that 30% of plasma from donors at the so-called border with Mexico has fallen due to the pandemic. ‘assets’ contacted the rejecting company pronunciation on parquet results. “We never talked about stock market issues. Neither when we did well, nor when we did badly,” internal sources explain.
Unlike the Grifols case, Rovi gained up to 54% and was cited as one of the best values.. “They have a very solid business in the production of heparin. They have also benefited greatly from being a supplier to Moderna Pharmaceutical, one of the main manufacturers of the vaccine against Covid-19. And their share of innovation is very interesting”, explains Álvarez, analyst at Tressis.
On the other hand, PharmaMar, which left Ibex 35 in December 2022 to be listed on the market continuously, has lost 5 percent since the pandemic. This company became one of the most valuable in Spain after running for election in September 2020, replacing the Ence paper group. The successive postponement of its drug called Aplidín in the fight against covid-19 and the end of covid hindered the company’s progress.
Companies such as Cellnex (-9.9%), Telefónica (-13.2%), Endesa (-15.6%) and Enagás (-24.3%) are in the queue.. “Borrower companies where the rise in interest rates went awry. They’ve made very strong investments in the past to grow,” explains Álvarez. “In addition to debt, Telefónica has recently suffered a significant loss of customers,” says Fernández of Beka Finance.
strengthened sectors
Banking and energy have been Ibex’s biggest winners since the health emergency began. The rise in interest rates in Europe contributed to the rise of bank bonds in the stock market. 21.69% more benefit than 2021. “The future of retail banking is very good, both in Spain and in Europe. Brokerage margins, the core business of depositors and lenders, have increased and have a long way to go until 2023,” Óscar says. Martínez, portfolio management manager at Norbolsa.
CaixaBank became the institution that gained the most value with an increase of 58.70%., followed by BBVA, Bankinter (+38.68%), Banco Sabadell (+27.27%), Unicaja (+20.40%) and Banco Santander (+10.93%) with 46.50% increase. The increase in rates in Europe contributed significantly to the increase in bank profits, especially in the second half of 2022; According to experts, it covers the capital cost of the sector.
This market segment has also been affected by the recent banking crises in the USA and Europe. The bankruptcy of Silicon Valley Bank, an organization specializing in financing start-ups, and the bailout of Credit Suisse, which will be absorbed by rival UBS and refloated with public funds. other bank stocks hit hard.
in this storm Between March 9 and 20 of this year, the 12 largest banks by business volume in the Old Continent lost 14.7% of their market capitalizations. The joint venture they owned from the market close on that ominous Thursday and until the session on Monday, March 20, when the strong volatility in the stock markets began to slow down and their titles slowly began to rise. A little.
The increase in energy and raw material prices as a result of Russia’s occupation of Ukraine also accelerated the energy-related companies of Ibex 35. Since the pandemic, Repsol has revalued up to 50%, while ArcelorMittal and Acciona have seen a 108.48% and 58.70% increase in their values, respectively. Other companies in the industry are also performing well since covid so far. This applies to Naturgy (+10.15%), Iberdrola (+12.25%) and Acerinox (+11.31%). Solaria’s progress in renewable energy heat and the explosion in solar self-consumption are also noteworthy. “ArcelorMittal and Repsol have the capacity to pass on raw material costs to their customers. Other companies dedicated to the commercial or industrial segment are having more difficulty doing this and their margins are falling due to the rise in prices, this is the case with Inditex and Colonial,” says Beka Finance group analyst.
at least 18%
ArcelorMittal is one of the companies that benefit most from PERTE’s decarbonisation. The company received a 450 million grant to use green hydrogen at its facilities in Asturias.. The industry jealously guarded the details of the deal, which now had to be made public at the request of the Transparency Council.
Considering the 14% increase in inflation in these three years compared to the appreciation of Ibex 35 at that time (4.76%) and in a broad analysis, It is concluded that values that do not appreciate at least 18% cannot beat the price increase.. Some of these are Ferrovial, Inditex, Aena and ACS.