This fund’s top five holdings are: Banco Santander SA (BCDRF.BC, 13.18% of assets); Telefonica SA (TEFOF.BC, 9.06%); Banco Bilbao Vizcaya Argentaria SA (BBVA.BC, 7.63%); Iberdrola SA (IBDSF.BC, 7.16%); and Industria De Diseno Textil SA (I DEXF.BC, 6.85%)
Deutsche X-trackers MSCI Spain Hedged Equity (DBSP)
From Capitalist Times
Spain’s equity market boasts the most upside potential among EU members, thanks to solid domestic demand and GDP growth that could slow but should still exceed the eurozone’s average.
Betting on Spain remains risky because the economy isn’t necessarily in the clear, and the government must implement significant austerity measures to narrow the budget deficit. Nevertheless, public finances have improved and should be able to support further economic reform.
The IBEX 35 Index, which tracks the most liquid stocks traded on the Bolsa de Madrid, has underperformed this year and fetches a discount relative to other EU markets. This weakness stems in part from Spanish companies’ exposure to emerging economies in Latin America.
But conditions in South America have shown signs of improvement. Argentine bond yields, for example, have declined significantly since the new government formed at the end of 2015. Even Brazil’s sovereign borrowing costs have declined; the yield to maturity on 10-year bonds issued by the government and denominated in US dollars has shrunk to 4.76% from about 6.5% in March.
If Latin America’s leading economies indeed stabilize and the global financial system avoids another crisis, Spain’s equity market could outperform.
Deutsche X-trackers MSCI Spain Hedged Equity (DBSP) offers one-stop exposure to this market
and hedges out fluctuations between the value of the US dollar and the euro.
Yiannis G. Mostrous, Capitalist Times, www.capitalisttimes.com, 888-960- 2759, July 28, 2016