Spain’s stock market is one of the best performers in Europe — and there could be more upside ahead
A booming economy and well-positioned corporations has helped make Spain’s stock market one of the best performing in Europe this year. Spain’s benchmark IBEX 35 has gained around 30% since the start of 2025, outperforming many of its peers in Europe and beyond. .IBEX YTD line IBEX 35 year-to-date price Elsewhere on the continent, Germany’s DAX index — up more than 20% so far this year — has also been an outperformer , bolstered by optimism over Berlin’s “fiscal bazooka” that will see vast investments made in infrastructure and defense. But the index is still trailing behind its Spanish counterpart. The IBEX 35’s year-to-date gains are also far ahead of those seen among Wall Street’s major indexes. Meanwhile, Spain’s IBEX Small Cap index is up by 22% so far this year, and the Madrid General index has jumped 30%. Like Germany, Spain has benefited from economic optimism this year. The Spanish economy grew by a better-than-expected 0.7% in the second quarter, and is expected to be one of the European Union’s best performing economies in 2025 and 2026, with forecasted growth of 2.6% this year followed by 2% growth next year. “The Spanish economic success has [partially] been driven by massive immigration (primarily from Latin America) leading to a significant growth in domestic consumption and subsequently on company revenues,” Arturo Bris, a professor of geopolitics and finance at IMD Business School, told CNBC in an email. “The country has attracted lots of foreign capital, driven by two forces: one is the growing strength of the euro . Second … political stability and predictability.” More upside ahead? Anthony Esposito, founder and CEO of U.S.-based asset manager AscalonVI Capital, told CNBC that he is “not a fan of any equity market right now,” arguing that investors were not fully pricing in risks arising from various factors including debt levels, inflation and labor market risks. He conceded, however, that there were some “compelling” factors at play in Spain’s case. “If you’re putting money into a developed market, Spain makes sense,” he said, noting that the country has stronger growth prospects than most of its peers aside from Germany. “Spain has bright spots in financials, utilities, and renewables — sectors that show stronger growth potential than many other Western European economies.” Esposito also pointed to the trailing price-to-earnings ratio in the Spanish equity market, which he said currently sits at around 12, compared to Germany and France near 20, and Italy at 13. “Those markets may lack balance and look overvalued — Spain’s valuation is more compelling,” he said. When considering Spain’s benchmark index against Germany’s — which has been a focal point of 2025’s European “revival” trend and hit record highs this year — Esposito said: “If I had to pick, I’d lean toward Spain.” “The IBEX chart shows more room for consolidation and greater potential upside,” he elaborated. In addition to a strong economy and rising foreign investment, IMD’s Bris said the composition of the Spanish stock market — which is largely made up of services exporters and domestically-focused firms — had helped lift sentiment. Services exporters are protected from the full force of U.S. President Donald Trump’s tariffs regime, which targets goods, while companies who benefit from domestic trade are also spared the full blow of America’s blanket 15% tariffs on EU goods . “The Spanish stock market includes services exporting companies with business in the EU and beyond,” Bris said, pointing to lenders BBVA and Santander , infrastructure firm Ferrovial and electric utility giant Iberdrola as examples. Each of those firms has seen major gains this year. In a note earlier this month, strategists at Swiss investment bank UBS gave various markets, sectors and companies in Europe a “R.E.V.S.” score, based on economic regime, earnings, valuations and sentiment. When ranking six major regional indexes against those criteria, Spain’s IBEX came in second place, narrowly missing out on the top spot, which was held by Italy’s FTSE MIB. Spanish companies, meanwhile, accounted for one in five of UBS’s 20 highest-rated European stocks in the R.E.V.S. ranking. They were utility firm Naturgy Energy Group , infrastructure giant Acciona, airport operator Aena , and lender Bankinter . Of those, however, only Aena was given a “Buy” rating by the bank, with the rest rated neutral or unrated. — CNBC’s Gaelle Legrand contributed to this report.
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