Spanish Stocks Fall, Led by Astroc, BBVA: World's Biggest Mover
By Alexis Xydias and Jeffrey T. Lewis
April 24 (Bloomberg) -- Spanish stocks tumbled after a plunge in real-estate developers fueled concern the nation's property boom is imploding and will hurt builders and banks.
Astroc Mediterraneo SA, a developer based in Valencia, led the decline. Grupo Inmocaral SA, Spain's second-largest real- estate company, and Banco Bilbao Vizcaya Argentaria SA, the country's second-biggest bank, also slumped.
``This is the burst of the Spanish real-estate bubble,'' said Alberto Espelosin, a strategist at Zaragoza, Spain-based Ibercaja Gestion, which manages about $7 billion. ``Banks are exposed and have risk.''
The IBEX 35 Index fell 321.6, or 2.2 percent, to 14,665.5 as of 11:25 a.m. in Madrid, the biggest fluctuation among equity markets included in global benchmarks. The Madrid Stock Exchange General Index declined 2 percent to 1,625. Portugal's PSI-20 Index declined 0.3 percent to 12,115.49.
Spanish property stocks have rallied in recent years as low interest rates encouraged borrowing and inflated home prices. Astroc, which rose more than ten-fold last year, started the slump in the past week as stricter urban planning rules in its home region sparked concern the company's earnings will fall.
Astroc dropped 12 percent to 15.50 euros, after sliding 37 percent yesterday. The shares surged to a price-earnings ratio of 97 earlier this year. Inmocaral fell 14 percent to 4.22 euros. Montebalito SA, another Spanish real-estate company, plummeted 20 percent to 20 euros.
`Outrageous'
``The catalyst for this downfall movement has been Astroc,'' wrote ING Groep NV analyst Javier Ruiz-Capillas in a note to investors today. ``We believe that performance was completely unjustified, outrageous and explained by low liquidity and people building stakes. Now the turn down is here and people are translating the risk to all real-estate companies, afterwards to Spanish contractors, and finally to banks.''
Spanish home prices surged at an average annual rate of 15 percent between 1999 and 2005, fueled by foreign buyers of vacation homes and an influx of immigrants. Four Spanish real estate companies, including Astroc, took advantage of that surge in property values by selling shares to the public last year.
House prices are now growing at an annual rate of less than 10 percent for the first time in more than five years as borrowing costs started rising.
Banco Bilbao declined 46 cents, or 2.5 percent, to 18.17 euros. Rival Santander Central Hispano SA fell 26 cents, or 1.9 percent, to 13.52 euros.
Construction companies also fell. Fomento de Construcciones & Contratas SA, Spain's third-biggest builder, lost 3.5 euros, or 4.6 percent, to 71.90. Acciona SA declined 4.1 percent to 165.35 euros.
To contact the reporters on this story: Alexis Xydias in London at
axydias@bloomberg.net ; Jeffrey T. Lewis in Lisbon
jtlewis@bloomberg.net
Last Updated: April 24, 2007 05:57 EDT
