Madrid, May 31 (EFE) .- The stress index of the Spanish financial markets continued to decline until reaching low levels, in line with the values observed before the pandemic, according to the Financial Stability note published this Monday by the National Commission of the Stock Market (CNMV).
The supervisor explained in a statement that, at the end of May, the level of stress in the markets continued to decline, reaching 0.23 points, a low level, at which it has remained since mid-March.
The evolution of national financial markets in recent months has been marked by the increase in both stock prices and the returns on public debt assets.
In the equity markets, the Spanish selective, the IBEX 35, accumulated a rise of 14% until May 21, a behavior similar to that of the main European indices, thanks to the recovery of the banking sector and the sector’s securities services.
“The volatility and liquidity conditions of the market continue to be satisfactory but the trading volumes are low,” adds the CNMV.
The supervisor also specifies that in fixed income markets, the increase in yields, which interrupts the downward trend of 2020, responds to certain fears related to a possible rise in inflation in the euro zone and also to an effect of contagion derived from the rebound in the profitability of US debt assets, “where this risk is most relevant.”
Regarding the most relevant financial risks identified by the CNMV and that may affect the markets, liquidity stands out, especially in some fixed income assets.
“New bouts of volatility or an abrupt change in growth expectations could lead to a general increase in risk premiums (and consequently price declines) that would be negative for both the issuers of the assets and their holders. “, alert.
In addition, the financial “vulnerabilities” that derive in the medium term from the increase in the indebtedness of the agents during the crisis, including that of the Public Administrations, stand out.
The CNMV also details that the most relevant sources of risk in terms of financial stability continue to evolve unevenly, since those of political origin at the international level decrease.
However, those derived from the increase in non-contact activities and the context of interest rates (among which are those derived from the search for profitability, with investments in highly volatile and sometimes unregulated assets) are maintained.
Finally, he points out, others acquire increasing importance. Among the latter, the macroeconomic risk, derived from doubts about the intensity of the recovery, those of cybersecurity in the new digital environment, and also those related to the promotion of sustainability, which are diverse.
Some of the latter derive from the difficulties in valuing these assets, within a heterogeneous information framework, and also from the vulnerabilities that can be generated in the face of strong demand for these assets, both due to the possibility that prices may move away from those fundamentals as well as the risk of promoting the activity known as “green washing” or ecological laundering, concludes the CNMV.
(c) EFE Agency