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Investment Talks - Spain: Forming a coalition will take time, but the picture looks benign for investors

London, UK, 5/15/19,  by Amundi

The outcome: The ruling Socialist Party of Pedro Sánchez came first, however without an absolute majority in Parliament. The new, far-right, VOX party also entered Parliament.

The next step will be the search for a majority coalition. The design of the next “Coalition in power” is not an easy task for two main reasons: the harsh words exchanged between contenders during the Parliamentary campaign and the next regional elections, that will take place the same day as the EU elections (May 26th). The negotiation process could take some time.

Risk assessment: No imminent threat to economic stability, considering the strong economic improvement already achieved by the country. Fiscal discipline should be monitored, especially in the case of a coalition or alliance with the far-left

Long term risks, similar to the rest of Europe, relate to the emergence of more extreme political forces. However, we do not see the Spanish election as a game changer for the European elections, although they may give even more impetus to those anti-institutional forces that make subsequent national elections less predictible.​​​​​​​

Bond Market assessment: In Spain, Government Bonds remain supported by the good momentum of the economy and their risk adjusted return is still fair, in comparison with other peripheral bonds (Portugal relatively rich, Italy more volatile). Spanish IG credit also relatively attractive (hunt for yields is set to continue).

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Amundi is Europe’s largest asset manager by assets under management and ranks in the top 10[1] globally. It manages 1,487 billion[2] euros of assets across six main investment hubs[3]. Amundi offers its clients in Europe, Asia-Pacific, the Middle East and the Americas a wealth of market expertise and a full range of capabilities across the active, passive and real assets investment universes. Clients also have access to a complete set of services and tools. Headquartered in Paris, Amundi was listed in November 2015.

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Footnotes

 

  1. ^ [1] Source IPE “Top 400 asset managers” published in June 2019 and based on AUM as of end December 2018
  2. ^ [2] Amundi figures as of June 30, 2019
  3. ^ [3] Investment hubs: Boston, Dublin, London, Milan, Paris and Tokyo

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