Benito Berceruelo, CEO of Estudio de Comunicación
January 25th, 2023
It is not easy to outperform others in this globalized and competitive world. Companies and countries have to convince clients and investors that their products are better than those of their competitors or that their track record deserves the highest credibility in order to getting them into their capital.
A global investor -of any kind (sovereign wealth fund, pension fund, family office, equity fund, bank, or any other kind of entity)- looks at the world as a whole, at all countries and all companies, to decide where to put his money. Ultimately, it ends up choosing some of them and ruling out others.
What is clear is that you do not choose what you do not trust, and you do not trust what you do not know. Therefore, the first thing a country or a company has to do is to make itself known, to inform about its reality and its plans for the future with transparency, with the aim of generating confidence and being selected among the many options that exist in the market. If we ask ourselves why an investor prefers Spain and not Italy, Portugal or the United Kingdom to invest in, there are some aspects that are key, perhaps obvious, but that are worth remembering.
The first thing an investor looks for is returns on the investment or expectations of earning money. Regular dividends that reward those who trust in a company are also important. The Spanish stock exchange is one of the markets in the world that gave the highest dividend yield in 2022. Despite the crisis and the problems of the past year, listed companies paid back their shareholders with a 3.9% dividend yield. This means a breathtaking 29% rise versus the previous year, or almost 24 billion euros. If we compare this with other countries such as the United States (1.6%), France (2.8%) or Germany (3.5%), we come out on top.
Two factors that have negatively affected the world economy, such as the increases in interest rates and energy prices have instead been beneficial for Spanish banks and energy companies, two sectors that weigh heavily on our stock market and that have contributed to a better performance than that of other markets.
Spain’s macroeconomic figures were also comparatively good. GDP and inflation data in Spain outperformed those of other neighboring countries. We have very competitive figures with GDP growth at 5% and inflation at 5.8%. The Eurozone average could close the year with a GDP growth of around 3% and inflation at 9.2%, with countries such as Italy at 12.3%, Germany at 9.6% and Portugal at 9.8%.
In short, Spain demonstrated last year that it is a “resilient” (not my favorite word, but it is politically correct) economy and that it has reacted to the harsh crisis better than other markets.
We possess clear strengths for 2023. Our great economic engine, tourism, which after suffering the consequences of the pandemic last year, has once again been a lifesaver and will once again bring us much joy. Certainly. In 2022 we were already on the verge of surpassing the pre-pandemic figures, and the improvement of tourism consumption is positive.
The Next Generation funds from Europe spilled into all the countries of the European Union, in spite of our management problems to ensure that they reach the real economy, will sooner or later spread to Spain’s businesses.
Sectors such as energy will bring substantial investments to our country in the coming months. Cepsa, Maersk and ACCIONA/ENVISION have announced investments of 5, 10, and 2.5 billion euros, respectively.
There is of course a long way to go, because there are issues that are decisive for investors and that our country must continue to improve, such as market unity, less red tape, the slow place of the justice system, the larger size of our companies, the firm commitment to reindustrialization, etc. Nevertheless, we can be optimistic.
On January 11 and 12, Spain Investors Day was held in Madrid, a forum that Estudio de Comunicación has been promoting for 13 years with the collaboration of partners such as BNP Paribas, Endesa, Deloitte, Cecabank, BME, PRISA and AON, and which brings together investors from more than 12 countries in Spain to learn first-hand about the plans of the Government and listed companies. It has been a great opportunity to explain our strengths, inform about the reality and future plans, and improve knowledge and confidence. A new edition that we have faced with the caution demanded by the economic situation, very conditioned by the war in Ukraine, but with the conviction that Spain is a powerful investment destination of which we can be proud and that we must value.