As Spain's IBEX35 index has broken levels not seen since 2008, Manuel Rodríguez López de Coca, Manager of Equities, Collective Investment Institutions (CII), and Pension Funds at MAPFRE AM says investors should buckle up for further potential gains.
The index broke 14,000 points on 16 May, a gain of 21.3%, and MAPFRE Economics has projected Spain's GDP growth to hit 2.5% this year and 1.7% in 2026 - well ahead of the eurozone average of 0.8% and 1.1% respectively.
"The structure of the Spanish market, with roughly 30% of the IBEX35 weighted in financials, has clearly bolstered its performance. Spanish banks, such as Santander, BBVA, and CaixaBank, have reported impressive earnings in recent quarters, which has resulted in substantial gains in their share prices so far this year: +54.84% for Banco Santander SA, +41.77% for BBVA SA, and +43.16% for CaixaBank SA,” states López de Coca.
"The outlook for the IBEX 35 for the remainder of 2025 is positive, thanks to a combination of macroeconomic, sector-specific, and external factors. These include Spain’s solid economic momentum, the strength of key sectors like banking and renewable energy, and European stimulus measures. Many companies listed on the IBEX 35 and the continuous market are trading at relatively low multiples compared to their European peers, which gives us room for medium- to long-term upside. Additionally, sectors such as real estate, banking, and utilities stand to benefit from the expected interest rate cut by the European Central Bank, potentially improving their margins and boosting investor appeal."
In terms of sector weightings, MAPFRE AM's own Iberian Equities fund currently allocates 28.22% to industrials, 13.91% to basic materials, and 13.07% to financial services.
The manager says that there is a general feeling of positivity towards European stock markets currently, as evidenced by the latest Bank of America survey, in which 81% of managers expect markets to continue rising over the next 12 months, while 44% anticipate an improvement in corporate earnings.
There are risks, according to López de Coca, who notes that “European companies are navigating a more challenging environment, marked by slower economic growth, geopolitical uncertainty, and the high costs associated with the energy transition. This makes them less dynamic than their US counterparts, which continue to be driven by large-cap tech firms with strong growth and solid earnings."
In contrast, Spanish companies tend to offer a more defensive profile, with attractive valuations and exposure to more traditional sectors such as banking, energy, and tourism. “These characteristics may appeal to investors seeking dividend income and stability in a volatile market environment.”
Dividends are also picked out as another reason to look at Spanish equity. Citing the 2024 Market Report by Bolsas y Mercados Españoles (BME), total shareholder remuneration rose by 25% last year to €37.86 billion. The sum of dividends and share buybacks reached €53.09 billion, setting a new all-time record.
