The stock market, a good indicator but not enough

If the stock market is the thermometer that indicates the health of an economy, in the case of the Spanish economy there would be no cause for complaint. Despite the highly polarized political context, it seems that for now it hasn't significantly impacted economic activity. Another issue, aside from macroeconomics, is the lack of budgets for the third consecutive year in both the national and Catalan governments.

The stock market, in which households participate less than during periods of major privatizations, is on track. The data is spectacular. with a revaluation of almost 50% in a single year, the biggest advance in the last thirty-two yearsThe Ibex, which comprises the largest companies by market capitalization in Spain, is showing performance that surpasses most stock exchanges in developed countries. Analysts believe that the indexes could continue their upward trend in the new year, given the performance of the Spanish economy, one of the most dynamic in the developed world. Contributing to the gains are the performance of banks, which have a significant weight in the Ibex and are maintaining strong results, with solid balance sheets. They are also benefiting from strong credit demand and delinquency rates far removed from those that triggered the 2008 crisis.

The prospect of increased spending on defense and security, along with renewable energy, which is experiencing a more favorable period in Europe than in the US due to the Trump administration's policies, contributes to this. One of the beneficiaries was Indra, with its shift towards defense. Another factor is the potential of artificial intelligence, despite the enormous investments it requires and the risk of a bubble bursting.

In any case, stock market figures only reflect part of reality. And in the Spanish case, that part is the reality of large companies with significant international operations. For the first time, there are five companies (four from the Ibex 35 and one from the continuous market) with a market capitalization exceeding €100 billion (Inditex, Santander, Iberdrola, BBVA, and Airbus), representing almost half (over €700 billion) of the total value of all companies listed on the stock exchange.

This reality does not affect SMEs, which make up the bulk of the Spanish and Catalan economies and are less involved in the stock market. They also face specific problems that require attention. Furthermore, as among the general public, inequalities seem to be growing between a few highly profitable companies and the majority that struggle much more to survive.

The stock market's euphoria, which tends to overreact to both positive and negative news and rumors, shouldn't blind us: a large proportion of shareholders are institutional investors, funds, and other financial companies, mostly foreign, who see significant profit potential. To begin with, the market should be broader, with more options to choose from and companies of varying sizes. Initiatives in this direction have already begun, such as the creation of growth company indices, but more are needed, and families should also be able to benefit.