Banking, textiles and wind power: the Spanish remontada
The IBEX 35, Spain's flagship stock market index, closed a remarkable year in 2024, recording an impressive 14.7% appreciation. This performance is even more remarkable when we consider the IBEX 35 Total Return (dividends reinvested), which brings the total return to 19.99%. It is made up of the 35 most liquid companies traded on the Bolsa de Madrid system, the main stock exchange of the four in Spain (Madrid, Barcelona, Bilbao and Valencia).
The index was created in 1992, and its name is an acronym for "Índice Bursátil Español", which simply means "Spanish Stock Market Index". This index is managed by Bolsas y Mercados Españoles (BME), which is also responsible for managing other stock exchanges and markets in Spain. The IBEX also includes broader indices such as the IBEX Medium Cap and IBEX Small Cap, which rose by 11.73% and 2.55% respectively in 2024.
Spain has enjoyed an impressive economic recovery since the global pandemic. In the third quarter of 2024, its real GDP was 7.3% higher than in 2019. This performance is attributed to several factors, including the country's low dependence on Russian hydrocarbons, notable self-sufficiency in power generation, effective exploitation of the "Next Generation EU" European stimulus plan, and the return of tourism.
The index is polarized around three main sectors: financials, energy and consumer goods companies, which account for 29.60%, 20.99% and 17.44% of the index respectively.
The rise of the IBEX 35 was strongly driven by the remarkable performance of its financial sector, which benefited from a climate of high interest rates in the eurozone. Its main players, Banco Santander, BBVA and Caixabank, continued on their upward trajectory in 2025, recording rises of 17%, 12.8% and 8.1% respectively, riding the wave of consolidation in the sector. Banco Santander is Europe's leading bank in terms of customer numbers, and is successfully expanding internationally. BBVA is in talks to acquire rival Banco de Sabadell (+16.8%). Together, the four aforementioned players account for more than 27% of the Spanish index.
The index's biggest weighting remains Inditex, parent company of Zara, at 15.9%, which enjoyed a dazzling year in 2024, up 25.8%. Although the company is experiencing a slight slowdown at the start of the year, it dominates a ready-to-wear sector where competitors are struggling to compete. Finally, the second-largest weighting with 14.1%, Iberdrola, a leader in renewable energies, saw its share price rise by 11%, holding up well against marked volatility on the energy markets. It has to be said that Spain is very independent from an energy point of view, being unaffected by, among other things, resources from Russia.
Spain also hosted the largest IPO in Europe since 2022. Luxury goods group Puig Brands raised 2.61 billion euros in May. Including the over-allotment option, this amounted to 2.74 billion euros. Since then, the group has plummeted by more than 27%, struggling to stabilize its position in an ailing luxury goods sector.
Italy in the spotlight
The FTSE MIB (Milano Indice di Borsa) is the main stock market index of the Italian Stock Exchange, known as Borsa Italiana. The index is made up of 40 large-cap stocks. The history of the FTSE MIB index dates back to the creation of the Borsa Italiana itself, which was founded in Milan in 1808. However, the index as we know it today was formed more recently. Prior to the creation of the FTSE MIB, the benchmark index for the Italian market was the MIB-30, which was launched in 1994. In June 2009, Borsa Italiana and the London Stock Exchange Group (which had acquired Borsa Italiana in 2007) formed an alliance with the FTSE Group. Following this alliance, the S&P/MIB was renamed FTSE MIB, marking the beginning of the index in its current form.
The good economic health of Italian companies reflects the country's efforts to consolidate its deficit and attract capital. For the full year 2024, Italy's deficit target is 3.8% of GDP, a significant improvement on the 7.2% of 2023. Italy rises to become the fourth largest exporter in H1 2024, with a record low in unemployment figures at 5.8% last October (against an average of 9.38% since 1983). Meloni's policies seem to be bearing fruit, making Italy Trump's preferred European counterpart on the international stage, sending out a pro-business signal that could attract even more foreign investment.
Like the IBEX, the financial sector is the most important, accounting for 31.5% of the index's total weighting. It was the banks in particular that drove the index's performance in 2024, with the FTSE Italia All-Share Banks Index gaining 9.7% since January after exploding by 42.3% and 52.6% in 2023 and 2024. One big winner is, of course, champions UniCredit (+13.2%), whose soap opera with Commerzbank has animated European banking news. Generali (+11%) was the other most recent riser, having formed its Asset Management division with Natixis to create a European asset management giant. Generally speaking, all Italian banks and insurers have performed very well over the last twelve months.
Next come the automotive, utility and energy sectors, which account for 15.1%, 14.4% and 9.7% of the index respectively. Apart from Ferrari, which appreciated by 35% in 2024, Stellantis lost 40% over the same period, despite a slight rebound at the start of the year. Tire manufacturer Pirelli got the year off to a flying start with a 7.5% rise.
Enel, the index's third-largest shareholder and Italy's leading electricity producer, and Eni, the oil and gas extractor, successfully navigated a highly volatile price environment. Finally, defense systems designer Leonardo S.p.A. continued its ascent. A veritable darling of investors, the company has gained 13.5% since January 1, continuing its extraordinary growth by surfing on the booming defense sector. At the same time, Moncler is back in the black, wiping out its 2024 loss in value with a 20.2% rise in its share price.
