The Spanish stock market surpasses 14,000 points: key insights behind the rise

The Spanish stock market is shining brightly once again. On Friday, May 16, the IBEX 35 broke through the psychological threshold of 14,000 points, a level not seen since 2008. This milestone represents a 21.3% rebound year-to-date, fueled by economic forecasts that position Spain well ahead of its European neighbors. According to the latest projections from MAPFRE Economics, the country is expected to grow by 2.5% in 2025 and by 1.7% in 2026, figures that are well above the Eurozone's modest outlook of 0.8% and 1.1%.

Another factor that gives the Spanish stock market an advantage over those of its neighboring countries is its high exposure to the finance sector. A survey by Bank of America of European fund managers shows that 22% view it as the top-performing sector so far this year, followed closely by pharmaceuticals, which was highlighted by 19% of respondents. Moreover, 28% of managers report being overweight in this sector.

“The structure of the Spanish market, with roughly 30% of the IBEX 35 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 Manuel Rodríguez López de Coca, Manager of Equities, Collective Investment Institutions (CII), and Pension Funds at MAPFRE AM.

The equity manager also points to several factors driving the stock market’s growth, including a reduced perception of geopolitical risk and the monetary and fiscal stimulus policies in Europe. Compared to other European indices, he notes, the IBEX 35 is “well positioned,” with encouraging forecasts for the months ahead.

“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,” argues Rodríguez López de Coca.

To capitalize on this positive momentum, MAPFRE AM offers the MAPFRE AM Iberian Equities fund, which invests in Spanish and Portuguese equities. The fund has posted a 19.2% gain so far this year, making it one of the asset manager’s top performers in the short and medium term.

“MAPFRE AM Iberian Equities invests in companies headquartered in Spain and Portugal, or those whose core business activity takes place in these countries. As such, investing in this fund provides exposure to Spain and allows investors to benefit from the strong performance and favorable outlook of the Spanish stock market in the coming quarters,” explains Rodríguez López de Coca.

Currently, the fund allocates 28.22% to industrials, 13.91% to basic materials, and 13.07% to financial services. The equity manager also emphasizes the fund’s investment approach, which focuses on identifying high-quality companies that are reasonably valued, with the clear objective of preserving capital.

Positive outlook for the European stock market

European fund managers remain optimistic about equities across the continent. According to the latest Bank of America survey, 81% expect markets to continue rising over the next 12 months, while 44% anticipate an improvement in corporate earnings.

That said, the outlook for European equities is not without its risks. “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,” Rodríguez López de Coca notes.

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.”

A dividend paradise

The Spanish stock market ranks among the most generous when it comes to dividends, the portion of a company’s profits distributed to investors as a form of return. According to 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.

MAPFRE, for its part, closed 2024 with an average dividend yield of 6.9%, in what was also the most profitable year in the company’s history. Thanks to these strong results, MAPFRE was able to increase its final dividend to €0.095 gross per share, bringing the total dividend for fiscal year 2024 to €0.16, the highest ever paid by the company.

“This dividend marks a new historic high and reflects our strong commitment to shareholders. We’re entering 2025 with great optimism and confidence in our ability to continue creating long-term value,” said Antonio Huertas, MAPFRE CEO, during the company's presentation of its 2024 results.