It Is Trading At A 30% Discount To The MSCI Europe

The Spanish Stock Market, One Of The Most Undervalued In Europe

Bolsa española.
Bolsa española.

T.C. | Last Friday, the Spanish stock market closed at a twel­ve-­month high, with the se­lec­tive Ibex 35 index above 8,800 points (8.815). The good re­sults from some com­pa­nies which have al­ready pre­sented their first quarter fi­gures (Santander, Repsol, Naturgy, Indra, Viscofan…) pushed up the in­dex.

However, as Morgan Stanley analysts explain, “Spain continues to have negative EPS (Earnings Per Share) and DPS (Dividends Per Share) revisions relative to the market… although it continues to trade at a 30% discount to the MSCI Europe”, when “the historical average is 20%, making it one of the most undervalued countries in the region.”

In a brief review of the continent’s stock markets, Morgan Stanley explains that Sweden is the country with the best EPS and DPS revisions in the market, “being the second best performer over the past three months… and the second most overbought.”

Switzerland “has lagged the market, underperforming by 6% in the last three months, given the strength of cyclicals. Switzerland is starting to look attractive at these levels.”

In the French market “relative returns are back to pre-pandemic levels…although there is a growing disconnect between relative returns and EPS.”

The UK “continues to have little investor affection, with relative returns at the bottom of the five year range.”

Meanwhile, the Italian market “has undergone a pullback from recent overbought levels… but still remains far from oversold. Valuations for Italy are close to the long-term average.”

In the report, the MS analysts say they provide “a summary of returns, sentiment, valuation and fundamental trends in European countries.”

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