The Business Times

Boom in Spanish bonds, stocks shows market lacks reality

Published Wed, Apr 9, 2014 · 10:00 PM
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CONTINUED pensioner and jobless protests in Puerto del Sol, Madrid's main shopping centre, show that investors in booming Spanish bonds and stocks are out of touch with economic reality.

Since mid-2012 when the economic crisis of Spain and other weak eurozone nations was at its worst, 10-year Spanish government bond yields have fallen from a peak of 7.6 per cent to 3.2 per cent. The capital gain on bonds, excluding interest, has been 46 per cent while Spain's IBEX 35 stock index has jumped by 79 per cent and was recently up by as much as 85 per cent. Such is the euphoria of yield-hungry US and other foreign investors that five-year Spanish debt, currently trading at 1.73 per cent, briefly dipp…

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