What is the IBEX 35?
The Spain 35 (IBEX 35) is a benchmark tradable index that tracks the performance of the top 35 stocks listed on the Spanish Stock Market. Launched in 1992 as a free-float capitalisation-weighted index, it has no top weighting limit for one constituent unlike many other stock market indices.
The IBEX 35 is calculated by the Spanish company Bolsas y Mercados Españoles (BME) and is reviewed on a quarterly basis. At each review, the 35 companies with the highest trading volume in euros over the preceding six months are selected for inclusion in the index, subject to certain stipulations. For example, the average free float market capitalisation of the stock must be at least 0.3% of the total market cap of the index.
As well as being the national and international benchmark of the Spanish Stock Exchange, the IBEX 35 index serves as an underlying asset for a wide range of financial products such as futures and options. Since its creation over a quarter of a century ago, its return has reached 255% and its average annual return has been around 6.8%.
Spain also has a number of other stock market indices, notably the Madrid Stock Exchange General Index (IGBM). In the regions there’s the Valencia Stock Exchange General Index and Barcelona’s BCN-100 – a trade-weighted index of the Catalan exchange's 100 most-traded stocks.
Who are the constituents of the IBEX 35?
The IBEX 35 index is dominated by industries such as financial and real estate services, oil and energy corporations, and consumer goods companies. Among the more well-known constituents are airport operator AENA; airline holding company IAG; steel and mining giant ArcelorMittal; utility companies Endesa and Iberdrola; and leading banks BBVA, Bankia, Bankinter, Banco Santander, Banco de Sabadell and CaixaBank.
What’s the history of the IBEX 35?
The IBEX 35 index was launched in January 1992, though its base value of 3,000 was calculated as of 29 December 1989. From 2000 to 2007 the index outshone many of its European peers, boosted by healthy domestic economic growth and a thriving construction industry. In November 2007 the IBEX 35 reached an all-time high of 15,945. But a period of volatility followed as the global financial crisis developed, and by March 2009 the index had plunged to under 7,000.
The Eurozone crisis and Spain’s own economic problems kept the IBEX 35 depressed for several more years, and in June 2012 the index stood at just 6,065. However, since early 2014 the IBEX 35 has made a number of forays back over the 10,000 mark – remaining there over the second half of 2017. To find out how the IBEX 35 index is doing right now, follow Capital.com. Our IBEX 35 char has all the details.
What’s the exposure of IBEX 35 companies to Catalonia?
In autumn 2017 the IBEX 35 index fell amid widespread concerns about a potential Catalonian secession from Spain. Some analysts even advised their clients to avoid Madrid-listed stocks. According to SocGen, Catalonia-based Banco Sabadell has around 20% of its credit risk in the region, while BBVA has 14%.
However, most IBEX 35 companies don’t have high levels of exposure to Catalonia. In fact, research by Spanish stock exchange BME found that IBEX 35 companies generated just 34% of their revenues in the whole of Spain in 2016. Banco Santander, for example, made twice as much underlying profit in Latin America as in its home market that year. It’s possible, therefore, that fears over Catalonia may be overdone.