Spanish IBEX is still one of the dogs in Europe seen year to date, but the IBEX has been one of the best performers in Europe lately.
We have written earlier about Spain’s Turkish exposure as well as other Emerging Markets exposure among primarily Spanish banks but also other companies like Telefonica.
Ibex has rallied off the lows and has managed putting in a rather impressive bounce. Note that the index is now approaching the negative trend and hitting 50 day average right here.
Banks have also had an impressive bounce lately. Santander (SAN SM) is up some 10% from recent lows. The stock just pushed above the 50 day and is now approaching the 100 day average as well as the negative trend.
BBVA (BBVA SM), holding the largest Turkish exposure, is showing a similar picture as Santander. Note the negative trend as well as the 100 day average approaching. The bounces have been rather impressive.
During this bounce among Spanish banks, we have seen the Turkish lira take a breather as well (the Turkish lira has gained some strength). Correlation between BBVA and the Turkish lira has been high as the two assets have traded in tandem (white BBVA, orange the Turkish lira inverted).
Note how the share price of BBVA lately has continued gaining while the Turkish lira has not followed. Given the correlation between the two, especially as the Turkish situation has gained traction in media since the summer, it would be wise to keep track of the lira as BBVA starts approaching resistance levels soon and the gap versus the lira has started widening lately.
If the correlation is to continue, one of the assets need to catch up to the other. Which will it be?
Source: charts by Bloomberg
