The IGBM, as Spanish investors will know, is the General Index of the Madrid Stock Exchange and provides a series of stock values that in many cases are unknown by users. For this year in which we are immersed they are integrated a total of 127 values which represents one of the most powerful offers of equities in the old continent. Where all sectors are represented, from insurance to tourism, through the ever-present construction companies in the country.
The Madrid Stock Exchange can become a reference source beyond the selective index of national equities, the Ibex 35. These are values that can be more unknown to a good part of small and medium investors. But not for that, less suggestive to hire them and make our savings profitable from now on. Because indeed, if they are characterized by something at the moment, it is because you can find real business opportunities. Beyond other technical considerations and maybe also from the point of view of its fundamentals.
If the securities listed on the IGBM or the IGBM are characterized by something General Index of the Madrid Stock Exchange it is because they are small cap. In other words, they are small companies that maintain a trading volume in their lower titles. From this point of view, they are easier trading proposals for the strong hands of the financial markets, and this fact implies many risks to retail investors. It is the great disadvantage of opting for this index of Spanish equities.
IGBM: review in its composition
The Management Committee of the General Index of the Madrid Stock Exchange (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 semester of 2019. Based on the trading and capitalization data for the year, four new values are added to the index and another four are dropped compared to the last composition, with which the IGBM and the total index in the first half of 2019 they will consist of 127 values.
Likewise, the committee has proposed the reorganization of sectors in which the index of the financial and real estate sector is divided into two: index of the financial services sector and index of the real estate services sector. According to this proposal, the new financial sector index will have 4 subsector indices: banks and savings banks, insurance, portfolio and holding companies, and investment services. Meanwhile, the real estate services sector will have two subsector indices: real estate and others and SOCIMI.
Highs in Madrid equities
The summary of changes with respect to the last composition is as follows. Regarding the additions that have occurred in this period in the IGBM or General Index of the Madrid Stock Exchange, they are those that are set out below.
Amrest Holdings, as the value of new admission to the stock market on November 21, 2018. It is incorporated into the index of the consumer services sector, leisure, tourism and hospitality subsector.
Arima Real Estate Socimi, as a new listing value on October 23, 2018. It is included in the Real Estate Services Sector Index, Socimi subsector.
Berkeley Energy Limited, as a new listing value on July 18, 2018. It is included in the index of the basic materials, industry and construction sector, minerals, metals and transformation of metallic products subsector.
Solarpack Technological Corporation, as a new listing value on the Stock Exchange on December 5, 2018. It is included in the oil and energy sector index, in the renewable energy subsector.
Casualties in the IGBM
With regard to these movements there are also some especially significant and that any small and medium investor should take into account to make their investment portfolio from this current year. As in the case of the following listed companies:
Abertis Infrastructures, for having been delisted from the Stock Market on August 6, 2018, after the Public Offering of Acquisition (OPA) carried out 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 not meeting the selection and permanence criteria.
European Papers and Cardboards, as a result of the takeover bid for its shares made by DS Smith Plc. whose objective is to promote the exclusion of the shares from trading on the Spanish stock exchanges.
What are the values of this index like?
A question that many of the small and medium investors in our country ask themselves is what kind of securities they will find if they ultimately opt for the IGBM or General Index of the Madrid Stock Exchange. Not surprisingly, they present some very special features almost all of them and that we cannot abstract from these profiles. Especially if we want to operate with them from these precise moments. Well, we are going to expose you some of the keys that define these special stock values.
Volatility: these are values that present large differences in the conformation of their prices. Where there may be differences above 2% or even with a greater intensity. From this point of view they are more complex values to operate with. Where you can stay hooked if its evolution is not as expected by small and medium investors from the beginning.
Few titles traded: this is another of its most relevant contributions and that lead to its deviations being more violent than in the selective indices of national equities. With the risk that you may have certain problems adjusting the buy and sell prices in each of your operations.
Other very relevant characteristics
Other signals presented by the securities listed on the IGBM or General Index of the Madrid Stock Exchange are secondary. But not for this reason, not less important so that you take them into account to carry out your operations in the financial markets. As for example, the ones that we point out below:
They represent incipient business niches or that require financing to develop their business proposals. On the other hand, the interest they arouse among small and medium investors it is rather scarce. To the point that their taking of positions is certainly insufficient in many cases and above other considerations.
The little interest on the part of professional brokers is another of its most relevant signals. This factor affects that they are not followed nor are they part of the investment portfolios usually made by fund managers, both nationally and outside our borders. From this point of view, it takes away a bit of credibility for them to be recipients of retail investor operations.
Its monitoring is always much more complex than in the rest of the national equities. Among other reasons, because it is much more complicated your technical analysis and maybe even from the point of view of its fundamentals. In this sense, it should not be forgotten that some of these securities are recently created and therefore do not have a history in the listing to be analyzed with greater guarantees of success.
Operations over the Internet
It must be taken into account that the entities that allow financial operations through the Internet must have technical means and human beings that guarantee the security and confidentiality of the transactions. As well as the making available to the investor of all relevant information so that they can make informed investment decisions. With regard also to the securities included in the IGBM or General Index of the Madrid Stock Exchange.
In addition, their systems must have sufficient capacity to deal with extreme situations in the markets or due to high volumes of activity. Therefore, it is advisable and necessary for the investor to operate with registered entities that deserve sufficient trust and that have the corresponding contingency plans in place. This factor is especially valid in some values as special as those that make up this index of national equities.
In any case, it must be borne in mind that these proposals for investing in the stock market are neither better nor worse than others. If not, it will depend on other factors, including the profile provided by the small or medium investor. And above all of its ability to take on higher risk operations. Where you can earn a lot of money, but on the other hand, also leave a lot of euros on the road. Although the profitability may be the same as that obtained through the more conventional stock values, which is after all what it is. In this case, with an alternative to investment.