As with every new year, the start of January brings a series of changes to the main Spanish stock market indices. This includes the addition of new stocks and, conversely, the removal of others that will no longer be available on the exchanges. In any case, it's worth knowing which stocks will be affected by this change, as you might encounter a few surprises in these first few days of January.
In practice, this measure means that from now on you will have access to certain stocks with which you can trade to grow your savings. These stocks were previously unavailable for purchase. Conversely, others will no longer be eligible for your trading, and therefore you will face limitations. This review is not new or unusual; it occurs regularly at the start of each year.
On the other hand, the most significant corporate development will be the definitive drop in the share price of Abertis Infraestructuras , following its delisting on August 6th after the Public Acquisition Offer (OPA) made by Hochtief and Adveo Group International. This was one of the stocks with the largest weighting in the benchmark index of Spanish equities. This leaves the defensive toll road sector in a very weak position and with a truly insignificant representation compared to other European stock market indices.
Madrid Stock Exchange: ups and downs
For the current year, the Spanish stock market index will consist of 127 securities , following the addition of four new components and the removal of four others. The Management Committee of the Madrid Stock Exchange General Index (IGBM) has decided, in accordance with the Technical Standards for the Composition and Calculation of Indices, to approve the composition of the IGBM and the Total Index for the first half of 2019.
Based on the contracting and capitalization data for the year, four new values are added to the index and another four are dropped with respect to the last composition, with which the IGBM and the Total Index in the first half of 2019 are they will consist of 127 values.
The Committee has also proposed a reorganization of sectors in which the Financial and Real Estate Sector Index is split into two: the Financial Services Sector Index and the Real Estate Services Sector Index. According to this proposal, the new Financial Sector Index will have four subsector indices : Banks and Savings Banks, Insurance, Holding Companies, and Investment Services. Meanwhile, the Real Estate Services Sector will have two subsector indices: Real Estate and Others, and REITs (SOCIMIs).
Values causing high
These are the values that you will have from now on in the trading circles of the stock market and the summary of changes with respect to the last composition is as follows:
Amrest Holdings, as a newly admitted stock on the Stock Exchange on November 21, 2018. It is incorporated into the Consumer Services Sector Index, Leisure, Tourism and Hospitality Subsector.
Arima Real Estate Socimi, as a newly admitted security on the Stock Exchange on October 23, 2018. It is incorporated into the Real Estate Services Sector Index, Socimi Subsector.
Berkeley Energia Limited, as a newly admitted stock on the Stock Exchange on July 18, 2018. It is incorporated into the Basic Materials, Industry and Construction Sector Index, Minerals, Metals and Metal Products Transformation Subsector.
Solarpack Corporación Tecnológica, as a newly admitted stock on the Stock Exchange on December 5, 2018. It is incorporated into the Oil and Energy Sector Index, Renewable Energy Subsector.
Losses in the Madrid stock market
On the contrary, you will find that other securities will no longer be available and will therefore not be the subject of your operations in the equity markets. They are the following that we expose you below so that you take it into account when preparing your next investment portfolio.
Abertis Infraestructuras, for having been excluded from the Stock Exchange on August 6, 2018, after the Public Acquisition Offer (OPA) made by Hochtief AG.
Adveo Group International, suspended from trading by the CNMV on November 14, 2018 as a result of the refinancing process and the adoption of the protection mechanism provided for in Article 5bis of Law 22/2003.
Borges Agricultural & Industrial Nuts, for failing to meet the selection and retention criteria.
Papeles y Cartones de Europa, as a result of the public takeover bid for its shares made by DS Smith Plc. whose objective is to promote the delisting of the shares from the Spanish Stock Exchanges.
How will it affect your operations?
Regarding the new stocks, what interests you most right now is that you can start trading them this week, placing buy and sell orders just like with the others. However, they have the drawback of lacking a detailed analysis of their business lines. Similarly, they don't offer a technical analysis simply because they haven't been publicly traded yet. Therefore, it will be much more difficult for you to decide whether they are a good option for generating returns on your available capital this year.
On the other hand, you can't forget that these stocks are not currently subject to valuations by financial agents and intermediaries. You'll have fewer objective parameters for opening positions, and in this sense, the risks will be significantly higher than with stocks that have been listed on the Spanish stock exchanges for years. Furthermore, there's no doubt that their trading volume will be very low, since a large portion of these stock offerings come from very small-cap companies . To the point that they will likely be more volatile in the first few days of trading.
Strategies with these values
First and foremost, it's crucial to emphasize that trading these securities is more complex than other types. This is partly because their performance in the equity markets isn't regularly monitored. Indeed, there's no historical data on their price movements , making it harder to assess whether they're a good buy. The challenges in channeling investments are significantly greater, and there's no benchmark for their potential for appreciation at any given time.
On the other hand, another of its most relevant characteristics is price volatility . The differences between its maximum and minimum prices are very high, and can even exceed 5%. In this atypical scenario, it's quite normal for small and medium-sized investors to opt for other, safer stocks that won't create these problems. Only investors with a more speculative profile are likely to trade these newly listed companies.
Technical profile of the new companies
Companies debuting on the financial markets share some very well-defined characteristics. To begin with, they are typically low-capitalization stocks, and their prices can fluctuate dramatically with just a few shares traded. In other words, they are more susceptible to manipulation by the major players in the financial markets. They are therefore riskier, and trading them is inherently risk-laden. To the point that it can be said without fear of contradiction that generating returns on available capital with these stock market offerings is much more difficult, regardless of other technical considerations.
Another common denominator among these companies that begin trading on the stock exchange is their increased vulnerability to speculative attacks . Indeed, their value can plummet from 4% to 3% in just a few minutes. Only the most experienced investors in the financial markets are open to these types of trades, where the risks are higher and the potential returns become uncertain and difficult to predict.
Nor can we forget that these companies do not have profitable business lines and in many cases with a level of indebtedness that draws the attention of financial analysts. In this general context, they do not constitute a good idea to invest. Especially in a year as complex for the stock market as it seems this is going to be. Of course, there are better options to make the savings profitable and that is where you have to go from these precise moments.
This is not the time to experiment with equity trading because there is a lot at stake from now on. Nothing less than your own money. Where the risks are higher and the profitability they can offer constitutes a doubt that is very difficult to clarify at any time.