Bloomberg News

Spanish Stocks Rise on Hedging Amid Queen’s Jubilee

June 05, 2012

Spanish stocks rose for a second day after short interest fell in the biggest traded company and the City of London, home to many hedge funds, shut down to celebrate Queen Elizabeth II’s Diamond Jubilee.

Spain’s Ibex-35 (IBEX) rose as much as 1.5 percent after posting its biggest gain in three weeks yesterday, also a U.K. holiday. The index traded 0.3 percent higher at 11:00 a.m. in Madrid, led by Bankia SA. (BKIA)

The benchmark gained as the holiday marking the 60th anniversary of the monarch’s coronation freed investors to attend parties across the capital instead of selling Spanish stocks, said Ivan San Felix, an analyst at Renta 4 in Madrid.

“The hedge funds do a lot of damage and they’ve been heavily short on Spain,” said San Felix. “Let’s hope they relax, have a good time, enjoy the Jubilee, and maybe we can gain a bit more.”

Short interest in Telefonica SA (TEF:US), Spain’s largest company by market value, fell to about 2.1 percent of outstanding shares on June 1, the latest day for which data is available and the lowest level in at almost six weeks, according to data compiled by Bloomberg.

Short interest in Bankia, the lender that requested a 23.5 billion-euro bailout last month, dropped to two-month low of 2.5 percent on June 1, the last trading day before the four-day holiday.

The Ibex had dropped 29 percent this year through June 1 as investors bet the Spanish government will have to seek a bailout from its European Union partners in order to recapitalize its banking system. Prime Minister Mariano Rajoy on June 2 urged investors to ignore “irrational” concerns about Spanish securities and insisted the government won’t need a rescue.

The extra yield investors demand to hold Spanish 10-year government debt instead of the benchmark bunds narrowed to 524 basis points today.

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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Companies Mentioned

  • TEF
    (Telefonica SA)
    • $14.86 USD
    • 0.05
    • 0.34%
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