Only the electricity sector has remained afloat from the falls in the selective index of Spanish equities, the Ibex 35. That in just over a week has gone from 9.500 to 9.000 points and with a very technical figure that worrying for the interests of small and medium investors. Stock securities such as Endesa, Iberdrola or Naturgy they have been one of the few that has remained in positive territory during these days. Where the trade war between the United States and China has acted as a trigger for the selling pressure to have been imposed very clearly on the buying positions.
Within this general context, stocks around the world are showing the most important falls in recent years. With descents above 5%, in what constitutes the worst moment for the equity markets of the entire current year. Where cyclical values, industry and also financial groups are the worst performers in these days of serious corrections in all stock indices. With all the signs that the falls will deepen in the coming months.
Once again, defensive stocks have best responded to this selling attack on the financial markets. To the point that even in this new setting they have revalued compared to the marked prices just a week ago. It is true that the Spanish stock market has not fallen as much as that of the United States, but even so, this new crisis that affects the equity markets has come out very badly and that can last more days or even weeks. Before the breakage of important supports in its technical analysis that have complicated its appearance.
Electricity sector: safe from falls
Once again, the securities that make up this important sector of national equities have benefited the most from this new stock market situation. Among other reasons because a good part of the investors' money has moved towards its main stock values. In a very worrying environment for small and medium investors because the short and medium term trend has shifted from bullish to bearish in a few days of trading. While the electricity companies have been the only ones that have appreciated in the last week and against the opinion of the main analysts of the equity markets.
Within these movements, Endesa has risen up to 22,38 euros per share, while on the contrary Iberdrola continues trading above 8 euros. In both cases, under a free rise figure that is undoubtedly the best of all in the technical analysis of stock values. Where, as the falls are greater, these proposals are revalued to invest the money in the stock market. Exercising once again as safe haven values in Spanish equities. Where the money of a good part of the investors in the stock market is kept.
The only values in green
In this week it has been produced that almost all the values have been listed in red. Only the values of the electricity sector have changed the color of this very negative trend. It is an aspect that has attracted a lot of attention to small and medium investors. To the extent that they have turned to these positions to protect their positions in the equity markets. Being the only ones that have appreciated in the last week. With weekly appreciations of around 2% and 3% and which are also boosted by the return generated through dividends and which currently has an average and annual profitability of 6%.
While on the contrary, these values are being reinforced in their positions due to the weakness of the remaining values of the national equities. Even with the possibility that their positions can be strengthened from now on. At a time of great instability for equity markets as a result of the worsening of the trade war between the United States and China and that could aggravate the situation in the days before the arrival of the summer months. Where financial analysts foresee further falls that could take the Ibex 35 to 8.000 points.
How far can the Ibex go?
The outlook for the Spanish selective index is certainly not very positive in this new situation in the financial markets. To the point that it is already trading at annual lows and very close to levels below 9.000 euros. In this sense, it cannot be forgotten that the periods between the months of April and October are the most negative for investing money in the equity markets. Historically it has been a very negative period and it has almost always served so that the stock market values have depreciated in these months. Something that seems to be happening again, when the prospects seemed just the opposite.
While on the other hand, a maxim that almost always tends to be fulfilled in the equity markets cannot be forgotten. In the sense that it is preferable to earn a small amount than get weighed down for the future. These situations have been suffered by the vast majority of investors, even the most expert in stock market operations. This means that it is not worth risking money in operations in the financial markets. Unless the movements are aimed at the electricity sector and a good part of its representatives.
Upcoming dividends from power companies
Another aspect that favors the positions of the values of the electricity sector is that the dividend distributions among its shareholders are close. Because in effect, in the months of June and July these payments on account will be executed. This fact causes the contracting volume to rise in the coming days. With a lock in the investment portfolio of other securities and that they see as a refuge these proposals of the national variable income. With returns above 5% through a fixed and guaranteed payment every year. As one of the main attractions to subscribe for shares in the electricity sector.
There will be time to vary the investment strategy, such as after the payment of dividends or after vacation. Where you can opt for more aggressive sectors where the potential for revaluation are more powerful and that can be more of a joy from these moments. Although at the cost of assuming more risks in operations since their volatility is significantly higher due to the special characteristics of these securities. Because it cannot be forgotten that these are values that have suffered severe falls in these days of the month of May.
Buy or sell on the stock market?
When the capital gains begin to appear on the investments made, it is normal for savers to consider whether it is the right time to sell or, on the contrary, it is better to wait for the benefits are more bulky. For which it is essential to previously make a strategy in which the investor's objectives are delimited. Depending on your profile, the terms to which it is directed and the capital contributed, which will ultimately dictate whether to decide on one or another stock exchange alternative. Or on the contrary, stay in liquidity in the savings account.
In situations of upward trend, the most sensible thing is to hold the investment until obtaining better prices in its quotation. Or until signs appear that indicate the end of that, although there is a risk of fall into extraordinary situations that can make a value fall significantly with the consequent losses in your income statement. In this sense, it is very prudent to choose a formula that combines the equation between security and risk as a strategy to preserve the amounts contributed. Above in those bearish periods where it is easier for the small gains obtained to become a few trading sessions in the red for the investor. With the dilemma then of whether to sell with handicaps or to go even deeper into them.
In any case, we are currently in one of the most bearish moments in Spanish equities. With the latent risk that the Ibex 35 could go much lower than at the moment. It can even trade in a range that goes from 8.000 to 8.500 points. Especially if there are no solutions in the current trade war between the United States and China. Something that can perfectly happen to have from the latest statements of the American president, Donald Trump. With the risks that this can pose for small and medium investors. With the dilemma then of whether to sell with handicaps or to go even deeper into them.