Spanish Banks and Cyclicals

There has been considerable media interest in the Spanish economy over the past few days, with a special focus on banks and cyclicals. This note shows trends in the short base for the largest Spanish banks and some cyclical stocks. It is a peculiar feature of the Spanish business landscape that the economy is largely driven by European economic trends, but the stock market has a major Latin American influence.

The dates above the charts in red show recent dividend payments; these usually coincide with a spike in lending for arbitrage purposes (Santander, Fomento de Construcciones). However, it is clear that market sentiment has become increasingly negative for a number of these stocks - Sabadell, Credito, Bolsas y Mercados and Vallehermoso in particular. Despite considerable media discussion, the short position in BBVA shows no strong uptrend.

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