IBEX 35 hits record high: keys to understanding this new milestone

The Spanish stock market is celebrating: its benchmark index, the IBEX 35, reached a new all-time high of 16,000 points on October 27, coinciding with a broad upswing in equity markets worldwide. But what makes the Spanish stock market special?

“The IBEX 35 has two distinctive features that set it apart from other major European and global indices: its heavy weighting in large-cap companies (just five firms make up 60% of the index) and its strong focus on the financial sector (banks account for 40% of the index),” explains Javier Miralles, Manager of the MAPFRE AM Iberian Equities fund, which invests in listed companies in Spain and Portugal.

The performance of the banking sector is precisely one of the key factors driving the index's growth. “The banking sector has been the clear winner in European markets in recent years, benefiting from a more favorable interest rate environment that has allowed banks to optimize their business models. Combined with the growth of passive management, this has created the perfect conditions for the IBEX 35 to significantly outperform its European counterparts,” notes Miralles.

The same trend is playing out all over Europe: so far this year, the Stoxx 600 Banks index has posted a 49% return, followed by the Stoxx 600 Utilities at 24%. In contrast, the sectors with the weakest performance are media and auto parts, which have declined by 16% and 8%, respectively.

Miralles also highlights another notable trend: the divergence in performance between large-cap companies and mid- and small-cap firms. "This effect becomes very evident when comparing the year-to-date returns of the IBEX 35 with those of the IBEX Medium and Small Caps: they are all positive, but there’s a pronounced tilt toward large-cap stocks. This pattern has persisted for several years, largely due to the rise of passive management in investment,” he explains.

Improved growth forecasts

This new high for the Spanish stock market comes at a particularly favorable moment for the national economy, which continues to be the fastest growing in the Eurozone. In fact, MAPFRE Economics, MAPFRE’s research arm, has raised its growth forecast for Spain this year by 0.4 percentage points, bringing it to 2.9%.

But this doesn’t mean that all companies will thrive in this environment or maintain strong performance over time. "The challenge is to figure out which companies are managing their profits responsibly during this boom period, so that if the conditions shift or a macroeconomic or geopolitical event impacts growth, we’ll be invested in solid, resilient assets that can continue to deliver returns to our clients," emphasizes Miralles.

Interested in investing in the Spanish stock market? We have the fund for you

MAPFRE AM, the MAPFRE Group’s asset manager, has a fund that specializes in the Spanish stock market: The MAPFRE AM Iberian Equities fund. The fund has yielded a return of over 30% so far this year, and more than 70% over the past three years.

“The fact that MAPFRE is a leading Spanish company gives us an edge in specializing in the Spanish stock market, as we have firsthand knowledge of and access to most of the management teams of the companies we invest in. Plus, being locally based allows us to analyze company assets through regular site visits. This direct access gives us a clear advantage in managing the fund and enables us to offer a highly specialized product to our clients,” says Miralles.

You can find all the details about the fund here.