The Spanish equity market has entered an era of shareholder democracy as domestic investors begin to pile in seeking a higher risk-return profile than they can get from traditional fixed-income investments.
"We were forecasting an influx of Pta585 billion ($4 billion) in new investment in the equity market this year but what we've seen in the first five months has already exceeded our estimate," says Cecilia Planiol, chief economist at Santander Investment. "We are in a situation where for the first time in Spain people feel that low interest rates are here to stay. Hence they are looking for ways to enhance the returns on their investments, and this means switching out of fixed-income instruments into the stock market."
Most analysts agree that the economic environment could hardly be more favourable for the equity market. Short-term interest rates, now at 5.25%, are closing quickly on German levels and the market...
