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IBEX 35 Trading: Spanish Stock Market Index

Trade IBEX 35
The IBEX 35 is the official index of the Spanish Continuous Exchange. It’s an index consisting of the 35 most liquid stocks of the Continuous market. Sociedad de Bolsas, the company running Spanish securities markets, is responsible for calculating, supervising, and publishing the IBEX 35. The equities use free float shares in calculating the index. The index was created using a base level of 3,000 as of 29th December 1989.
IBEX 35 in real time by TradingView
As Spain’s financial engine, IBEX companies include 35 of the country’s most prominent and liquid companies on Spain’s main exchange, the Madrid Stock Exchange.

 Contents
  1. Key points to keep in mind about the Spanish selective
  2. Why the IBEX 35 Index Matters to Traders
  3. Major Indices Related to the IBEX 35 Index
  4. How can one trade IBEX 35 CFDs?
  5. IBEX 35 Trading Hours
  6. Exposure of IBEX 35 Companies in Catalonia
  7. Conclusion
  8. FAQ section: Trade the IBEX 35 Index CFD

Key points to keep in mind about the Spanish selective

There are two annual reviews by the Technical Advisory Committee.

This committee comprises reps from the stock exchanges and derivatives market, alongside academics and finance professionals. The constituent companies make the cut depending on their performance with the highest trading volume in Euros from the previous six months. After appraising the liquidity and measuring securities, the committee considers various factors, and the top companies become part of the index. The average market cap of each stock is no less than 0.3 percent of the index's total market capitalization.

All selection changes concerning the index constituents become effective on the first day of trading in January or July.

The factors affecting the overall index price include economic shifts by sector or across the nation, trade embargo, trade agreements, industry-specific taxation, policy changes, and share price fluctuations in one or several constituent companies.

Why the IBEX 35 Index Matters to Traders

Thirty-five of Spain's largest and most actively traded companies are listed on the country's stock market. Since its establishment in 1992, it has served as a national and international benchmark index. It's also a crucial indicator of how Spain's stock market is performing.

The companies on the index span industries from finance to real estate, oil, and energy, to consumer goods.

Aviation: IAG
Airport Operator: AENA
Bank: Banco de Sabadell, Banco Santander, Bankia, Bankinter, BBVA, CaixaBank

The banking sector is significant in the composition of IBEX 35. For this reason, the currency markets have much influence on the performance of the index, starkly contrasting broader market indices such as the S&P 500. Political events that shake the stock market and impact index price dynamics include EU legislation issues, political events, and local elections.

Steel and Mining: Arcelor Mittal
Utility: Endesa, Iberdrola

Financial crises affecting European markets also impact the IBEX 35. The impact of increased debts in the Eurozone in 2007 is a case in point. Similarly, the December 2013 high unemployment rate of 25% negatively influenced the index. The IBEX 35’s dependence on European news makes it a volatile instrument with immense opportunities for traders.

Weighting and Calculation

The IBEX 35 is euro-denominated. Similar to other popular stock market indices, the IBEX 35 index tracks a pool of individual companies. Changes in the share prices of these companies will affect the index throughout the trading day.

As a capitalization-weighted index, it employs the market cap to calculate the weighting of each constituent. Depending on the fraction of shares not subject to block ownership, the product of the market cap and a free float factor (a range of 0.1 to 1) gives the weighting per constituent.

Therefore, the biggest constituents enjoy a higher weighting percentage, while smaller ones have a smaller impact. Any company with at least 50% of its shares classified as free float gets a free float of 1.

Unlike several other European benchmark indices, company weightings in the IBEX 35 are not capped. As of 2015, foreign-based funds – especially in Norway, the US, UK, and Qatar – owned 43 percent of the index, rising from 16 percent in 1992. This rate of foreign investment is 5% higher than the EU average.

Major Indices Related to the IBEX 35 Index

For the Spanish stock market, the IBEX 35 index is the most frequently quoted. However, some other indices include mid- and small-cap companies. These indices include:

  • The Madrid Stock Exchange General Index (IGBM)
  • The Valencia Stock Exchange General Index
  • The trade-weighted index of the Catalan exchange’s 100 most-traded stocks, BCN-100

How can one trade IBEX 35 CFDs?

CFDs or contracts for difference are one of the easiest and most popular ways to trade IBEX 35. It's essentially a contract between a trader and a broker that allows the trader to achieve the potential profit from the price difference between the opening and closing the trade.

Without going through conventional exchanges, traders may go long or short the market using CFDs to trade the IBEX 35.

Whether your view of the IBEX 35 forecast is positive or negative, it’s possible to profit from downward or upward future price movements.

IBEX 35 Trading Hours

Since IBEX 35 companies are listed on the major Spanish stock exchange, Bolsa de Madrid, their stock can be traded from Monday to Friday. The IBEX's main trading hours are from 9:00 AM to 5:35 PM (GMT+1:) five days a week. In other words, the index is calculated in real-time during the Madrid Stock Exchange (MSE) trading word within the European time zone.

Exposure of IBEX 35 Companies in Catalonia

Like any major index, the IBEX 35 has come under fair scrutiny. 2017 was particularly challenging considering the potential secession of Catalonia from Spain. A few experts advised their clients to avoid stocks listed on the Madrid Stock Exchange.

However, the majority of IBEX 35 companies don’t show high levels of exposure to Catalonia. Bolsas y Mercados Españoles (BME) has conducted research to show that the IBEX 35 companies derive only 34 percent of their revenues in Spain. A top IBEX 35 component by market cap, Santander made two times as much underlying profit in Latin America than at home in 2016. The issue of exposure to Catalonia may be blown out of proportion.

Between 2000 and 2007, the IBEX 35 performed better than many of its European counterparts due to healthy domestic economic growth and a thriving construction industry. It reached an all-time high of 15,945 in November 2007. But a period of volatility followed as the global financial crisis unfolded. The index dipped to under 7,000 by March 2009.

Spain’s internal economic problems and the Eurozone crisis has kept the IBEX depressed a few years on. The index was only 6,065 as of June 2012. However, it has regularly surpassed 10,000 since early 2014. It remained there throughout the last six months of 2017.

The Complete List Components of Spain’s IBEX 35 Index as of June 1, 2021 are listed below:

Acciona Bankia  ENCE Inditex Endesa
Acerinox Cellnex Telecom Merlin Properties SA Cie Automotive Naturgy Energy
ACS Masmovil Ibercom  Ferrovial Inmobiliaria Colonial Red Electrica
Aena Caixabank Gamesa Mapfre Repsol
Amadeus Bankinter Grifols BBVA Santander
ArcelorMittal Indra A IAG Mediaset Telefonica
B. Sabadell Enagas Iberdrola Melia Hotels Viscofan

Conclusion

The IBEX 35 is a significant index for investors. It isn’t merely a national and international benchmark for the Spanish Stock Exchange; it’s a foundational asset for financial products such as futures and options. The index is still under thirty years old, but its return has reached 255 percent, with an average annual return of around 6.8 percent.

If you’re looking for a comprehensive platform to learn about how to trade or invest in the IBEX 35 and how to trade CFDs using it, the Investlite website is a highly reliable resource. We're always updating the site with information to help you understand the advantages of trading IBEX 35 through the CFDs. We offer multiple channels to support you in making with information to make winning trades.

FAQ section: Trade the IBEX 35 Index CFD

What is the IBEX 35 index?

The IBEX 35 is short for Índice Bursátil Español. It’s the benchmark stock market index of Spain’s chief stock exchange, Bolsa de Madrid. It lists thirty-five of the most-traded stocks in Spain.

What makes IBEX is an attractive asset?

There are several reasons why traders like to follow the IBEX 35 index. Here are those reasons why it attracts numerous day traders:

  1. Significant day-to-day fluctuations.
  2. Exposure to substantial market price volatility.
  3. It’s the underlying asset for a broad category of derivative financial instruments.
  4. Volume and volatility of the index.

How to Start Trading IBEX (SPAIN35)?

Anyone can trade SP 35 (SPAIN35) by using a web-based trading platform that can handle thousands of assets, such as CFDs, at the same time.

Important note: This article is for marketing purposes only and it should not be treated as Investment Advice.

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