Spain ETF Putting Old Worries to Rest

ETF Trends

Investors are feeling more confident in Spanish assets and related exchange traded fund as Spain sold off a record amount of debt, pushing borrowing costs to a seven-year low.

The iShares MSCI Spain ETF (EWP) has gained 3.5% so far this year and is up 28.5% over the past year. EWP has attracted $196 million in assets year-to-date, according to IndexUniverse data.

In comparison the broader Vanguard FTSE Europe ETF (VGK) is up 0.5% year-to-date and increased 22.0% over the past year.

Spain issued 10 billion euros, or $13.6 billion, in new 10-year enchmark bonds maturing in April 2024, reports Angeline Benoit for Bloomberg.

“Spain looks to be on a recovery process and the consolidation of its fiscal conditions seem to have worked its way on the real economy,” Annalisa Piazza, a senior fixed-income strategist at Newedge Group, said in the article. “Demand was very solid” at the sale.

The surge in demand for the once troubled Eurozone peripheral state as they rebound from the financial debt crisis reveals the growing confidence in a recovery. [Strengthening PIIGS Puts Spotlight on Spain ETF]

“Spain is an example of the markets liking countries that implement reforms,” Alberto Gallo, head of European macro-credit research at Royal Bank of Scotland Group Plc, said in the article.

The Spanish economy expanded 0.3% in the fourth quarter. The government estimates that the economy will grow at least 0.7% this year.

The iShares Spain ETF has a heavy allocation toward the financial sector at 46.2%, followed by 13.2% in industrials and 12.0% in telecom services. The top two holdings, Banco Santander and Banco Bilboa Vizcaya Argenta, make up 31.6% over the overall portfolio.

iShares MSCI Spain ETF

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For more information on Spain, visit our Spain category.

 

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