The day after the general elections, the Ibex 35 chokes. In 9 of the last 10 elections to elect president, the Spanish selective has registered falls that have even exceeded 5%, according to data compiled by the fintech Micappital. The reason is not so much the color of the winner, but the uncertainty that follows.
Going back to 1993, thirty years ago, “except in very exceptional cases, election periods tend to have a negative effect on the Ibex 35, which tends to suffer both before and after election day”, noted in a note.
The only general election that was followed by a positive day was the first of 2019, won by the PSOE, since the Ibex scored a meager 0.12% rise. For the rest, there have always been falls, whether the socialists or the popular will win. Thus, if more falls arrive on Monday, it would be normal.
The greatest drop was recorded in 1996, with -5.22%. They were the first elections won by José María Aznar. A PSOE victory has also been met with strong sales, with falls of 4.15% after José Luis Rodríguez Zapatero won in 2004 or -1.75% in those of Felipe González in 1993.
“This analysis leads us to affirm that who wins the elections does not seem to influence the behavior of the Ibex 35, but that it is the uncertainty derived from the elections themselves that prevails over other factors and sets the course of the markets”, analyzes Miguel Camiña, CEO of Micappital.
The days before the elections, Fridays, are also usually negative but not so much. Of course, the coincidences of the calendar wanted the Friday before the 2016 elections to register the worst session in its history, after Brexit triumphed at the polls.
“Above the political party that governs, investments are mainly affected by the medium and long-term policies that it may adopt, and there fear is free and conditions the behavior of investors,” adds Camiña.
Where there is not such a clear trend is in the month that follows the elections, since four positives and another six negatives have been registered. Thus, after winning the PP the following month has been positive in 2016, with an increase of 10%, or in 2011 (1.74%). But they have also been negative, such as the 8% drop after those of 2000. The Socialists are experiencing something similar. In the two of 2019 the index lost ground in the following month (-3.31%, -0.71%) and in those of 2004 and 2008 it went up (5.13% and 8.42%).
