Castle Asia Share Discussion Threads

[waldron] 05/5/2007 11:11

Overhoused, overindebted and overpriced
By Mark Mulligan

Published: May 5 2007 03:00 | Last updated: May 5 2007 03:00

The alarm bells are well and truly ringing for investors over Spain's property market.

After the recent sell-off of Spanish property and construction stocks, investors are waiting to assess the fall-out of a housing market downturn in the country not just for sector stocks but the wider economy.

Although it is hard to pinpoint the magic moment at which the supply of new homes suddenly overshot expected demand, there have been signs for at least a year that the country has become overhoused, overindebted and overpriced.

Estate agents on Spain's Mediterranean coast long ago noticed that speculators were moving out of the market, leaving it mainly to committed first and second home buyers.

A consequent crackdown on municipal corruption began to weed out a lot of the operators who were using borrowed money and inside information to buy rural land earmarked for urban rezoning.

Demand from sun-starved northern Europeans, already flagging because of the high prices, took another hit from the graft scandals.

Some analysts also believe the tipping point for many prospective buyers came early this year, when real interest rates in Spain moved into positive territory for the first time since the country's adoption of the euro in 2002.

However, the clearest early warning signs that Spain's 10-year property boom was drawing to a close came from the construction companies. These first diversified into domestic infrastructure development during the last Spanish housing slump, in the mid-1990s.

This time round, groups such as Ferrovial, ACS, Sacyr Vallehermoso, Acciona and FCC have concentrated on infrastructure management, heavy engineering, energy and municipal services, while investing heavily outside Spain.

Ferrovial and ACS shed their real estate development businesses last year, while FCC has plans to float Realia, its 50 per cent- owned property business.

Sacyr's battle for control of Eiffage, the French construction group, is actuated as much by its desire to run APRR, a prized toll road in the Paris area, as by its wish to become less Spanish.

Similarly, Metrovacesa's €5.5bn purchase in 2005 of Gecina, a French rival, was part of a two-pronged strategy at Spain's largest real estate group aimed at reducing its domestic exposure while increasing its stock of commercial rental properties.

Despite being in the middle of a messy carve-up between warring shareholders, the company recently paid £1.09bn (€1.59bn) for the iconic HSBC tower in London, confirming its drive out of Spanish real estate development.

The fact that real estate groups accounted for half the 10 initial public offerings on the Madrid Bolsa last year was further proof, if it were needed, that the housing market was cooling.

The groups listed with the same objectives: to tap investors during a buoyant share market while positioning themselvesfor consolidation in the sector.

By subjecting themselves to the discipline of market rules, they also sought to distinguish themselves from the estimated 10,000 mainly project-based property developers in a country where real estate and corruption are synonymous.

The strategy paid off quickly for Riofisa, one of the newcomers, when it agreed to be taken over this year by Inmocaral, one of the main drivers of consolidation in the sector.

Parquesol, which today celebrates its first anniversary on the market, could be absorbed into Inmobiliaria.

San José is another large property developer looking to diversify and enlarge its portfolio as a cushion against rougher times ahead. However, all this merger and acquisition activity was fuel for the companies' share prices. Exacerbated by small free floats and unrealistic hopes about the sector's prospects, the shares, in some cases, soared well beyond rational valuations.

The bubble burst when Astroc, a Valencia-based developer, produced accounts that raiseddoubts about its asset base and business model. The shares plunged 65 per cent in five days in a waveof panic selling that dragged the rest of the sector with it.

"The Astroc factor has been the detonator for the correction, given that it was trading at prices that were much higher than the value of assets, during a period in which the outlook wasn't so bright," says Bruno Silva, sector analyst at BPI in Madrid.

The end of Spain's housing and infrastructure boom could have serious consequences in a country where construction accounts for about 18 per cent of GDP.

"A house price correction will not only be bad news for the household sector's ability for further debt take-up," says Lombard Street Research.

"It will also hurt incomes and employment significantly, given the economy's high exposure to construction and real estate."

[waldron] 04/5/2007 17:34

Date : 04/05/2007 @ 17:30
Source : AFX


Madrid shares close higher; Altadis, heavyweight banks up UPDATE


(Updates with full report)
MADRID (Thomson Financial) - Share prices closed higher in brisk trade,
rebounding from the week's underperformance, with Altadis leading gains and with
the focus on heavyweight banks, dealers said.
The IBEX-35 index closed up 224.7 points at 14,620.3, after trading in a
range of 14,426-14,636, on turnover of 10.7 bln eur.
Equities opened higher, continuing yesterday's late recovery thanks to
overnight strength on Wall Street, and extended gains throughout the day,
further buoyed in afternoon trade by continued optimism in US markets.
Altadis lead gains, rising 1.78 eur or 3.67 pct to 50.30, after CVC and PAI
Partners made an indicative offer for the group of 50 eur per share.
SCH rose 0.27 or 2.07 pct to 13.47, while BBVA was 0.38 higher or up 2.14
pct at 18.10.
Yesterday, an Amsterdam court blocked ABN Amro's 21 bln usd sale of its
LaSalle unit to Bank of America, boosting chances of success for bid by the
Royal Bank of Scotland, Fortis and SCH consortium.
Other banks were firm amid vague takeover speculation after Expansion
reported a consortium of Andalusian private investors is in talks to invest 15
bln eur to acquire a Spanish bank.
Bankinter was up 1.15 at 64.60, Popular put on 0.29 or 2.04 pct to 14.54 and
Banesto added 0.19 to 17.80.
Other leading blue chips were higher, with Telefonica rising 0.20 to 16.80
and Repsol YPF, up 0.35 at 24.92.
Endesa underperformed, adding 0.01 to 40.34 after disappointing
first-quarter figures, with investors waiting for further newsflow from a
conference call.
Other utilities were higher, with Fenosa up 0.39 at 40.70 and Iberdrola
adding 0.34 to 37.02.
Property and construction issues rebounded amid bargain hunting after recent
losses on negative sentiment in the Spanish property sector, with FCC up 2.00 or
2.94 pct at 70.00, Sacyr adding 0.95 or 2.44 pct to 39.90, Metrovacesa gaining
0.70 to 87.10 and Inmobiliaria Colonial rising 0.17 or 4.0 pct to 4.42. .
Iberia added 0.10 or 2.63 pct to 3.90, after a failed bid for Australian
airline Qantas by an APA consortium, which included Iberia suitor TPG, led to
speculation of a more heated effort for control for the Spanish carrier by the
US investment fund.

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[waldron] 04/5/2007 08:56

Madrid shares TFN at a glance outlook
Date : 04/05/2007 @ 07:49
Source : AFX


Madrid shares TFN at a glance outlook


MADRID (Thomson Financial) - Shares are expected to open moderately higher
continuing yesterday's late recovery and following gains on European markets and
on Wall Street, although investors will be cautious ahead of key US jobs data,
dealers said.
Yesterday, the IBEX-35 index closed down 21.30 points at 14,395.6, after
trading in a range of 14,176-14,454, on turnover of 7.6 bln eur.

FORTHCOMING EVENTS
TODAY
-Endesa results presentation at 11.00 am. Net forecast: 806.3-862.0 mln eur
vs 1.052 bln
-April jobless (Labour Ministry)
-March industrial production
-April services PMI
-Mapfre goes ex-div for 0.05 eur

TODAY'S PRESS
-Hispasat seeks IPO by year-end (La Gaceta de los Negocios)
-New CNMV chairman Segura proposes longer, non renewable term (El Pais)
-Fenosa seeks to waive EGM obligation if approached by bidder (Cinco Dias)
-Eiffage gave 22 mln eur of shares to staff two days after Sacyr veto (Cinco
Dias)
-Indra wins Madrid medical prescription technology contract (Cinco Dias)
-Jazztel sidelined in Ya.com bid in favour of Vodafone, Orange (Expansion)
-Cepsa to subscribe to part of La Seda 200 mln eur capital hike (Expansion)
-Andalusian private business consortium has 15 bln eur to buy Spanish bank
(Expansion)

LATE CORPORATE NEWS
-*ENDESA Q1 NET 633 MLN EUR, DOWN 39.8 PCT
-*ENDESA TO PAY FY 2006 TOTAL DIV 1.64 EUR/SHR VS INITIAL ESTIMATE FOR 1.6
EUR
-Acciona, Enel ask Spain energy regulator for Endesa bid authorisation
-AGBAR Q1 net 45.8 mln eur vs 45.6 mln
-ACS Q1 net profit 369.1 mln eur vs 158.2 mln

MARKET SENTIMENT
-The market is expected to open moderately higher, with focus on Endesa's
first-quarter results webcast for any update on its stance towards Enel and
Acciona's current bid.
But investors will be cautious ahead of key US jobs data later.
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[waldron] 03/5/2007 18:17

Madrid shares close lower, Cintra leads decline UPDATE
Date : 03/05/2007 @ 18:13
Source : AFX


Madrid shares close lower, Cintra leads decline UPDATE


(Updates with full report)
MADRID (Thomson Financial) - Share prices closed down with Cintra suffering
the worst of the selloff, but recovered from early lows after Wall Street gained
ground, and a legal setback to Barclays' bid for ABN Amro boosted SCH, dealers
said.
The IBEX-35 index closed down 21.30 points at 14,395.6, after trading in a
range of 14,176-14,454, on turnover of 7.6 bln eur.
Equities slumped in morning trade but recovered through the day. The index
climbed throughout the afternoon as Wall Street offered encouragement and shares
closed well off lows.
Cintra dropped 0.34 eur or 2.6 pct to 12.76 amid competition concerns on
reports that Macquarie Bank has created two new investment funds in
infrastructures.
But leading the wider recovery was SCH, boosted by news ABN Amro's 21 bln
usd sale of its US LaSalle unit to Bank of America has been blocked by an
Amsterdam court. The move makes success by the RBOS, Fortis and SCH consortium
more likely.
Blue chip banking rival BBVA was 0.01 lower at 17.72 while mid-cap banks
were off on mortgages market fears.
Banesto was 0.43 or 2.38 pct lower at 17.61, Banco Popular was down 0.31 or
2.13 pct at 14.25, and Bankinter slipped 1.35 or 2.08 pct to 63.45.
Media stocks were also sold heavily, with Telecinco falling 0.42 to 20.80,
after going ex-div for 1.28 eur per share.
Antena 3 was off 0.19 at 15.86 and Sogecable dropped 0.46 to 29.97, after
yesterday's outperformance in line with the sector Europe-wide after News Corp's
bid for Dow Jones.
Selected real estate issues also moved lower, with Grupo Inmocaral slipping
0.06 to 4.25 and Metrovacesa down 0.10 at 86.40.
Constructors continued to underperform the overall market, with Ferrovial
shedding 1.40 to 77.95 and Sacyr falling 0.45 to 38.95
ACS dropped to 44.60, ahead of first quarter results released after the
close.
Leading blue chips slightly outperformed the overall market, with Telefonica
up 0.02 to 16.60 and Repsol YPF gaining 0.10 to 24.57.
Agbar rose 0.16 to 26.92, after a report that the board had approved the
sale of Applus in which it owns a 53.1 pct stake, and also ahead of the group's
first quarter results, which were released after the close.
Net profits reached 45.8 mln eur compared with 45.6 mln a year earlier, as
the cost of financing acquisitions offset a 15.1 pct increase in operating
revenues.
Altadis fell 0.03 to 48.52, while its Logista unit added 0.85 to 58.90 after
reporting first-quarter net profit up 55.4 pct at 32.9 mln eur.
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[waldron] 03/5/2007 07:59

Date : 03/05/2007 @ 07:42
Source : AFX


Madrid shares TFN at a glance outlook


MADRID (Thomson Financial) - Shares are expected to open flat to slightly
higher after another record session on the Dow Jones, but trading will remain
cautious ahead of key US data and amid ongoing earnings reports, dealers said.
Yesterday, the IBEX-35 index closed up 42.3 points at 14,416.9, after
trading in a range of 14,363-14,462, on turnover of 5.8 bln eur.

FORTHCOMING EVENTS
TODAY
-ACS Q1 results (after the close). Net forecast: 252.0-299.0 mln eur vs
158.2 mln
-Telecinco goes ex-div for 1.28 eur/shr
-Duro Felguera AGM (Oviedo at 12.00 pm)
-EDP news conference on Q1 results (Oviedo at 6.00 pm)

TOMORROW
-Endesa Q1 results, presentation at 11.00 am. Net forecast: 806.3-862.0 mln
eur vs 1.052 bln
-April jobless (Labour Ministry)
-March industrial production
-April services PMI
-Mapfre goes ex-div for 0.05 eur

TODAY'S PRESS
-ACS's Florentino Perez to join Abertis board after next AGM (Cinco Dias,
Expansion, La Gaceta de los Negocios, El Economista)
-AGBAR board approves sale of Applus (Expansion)
-Viesgo Chairman Antonanzas slated for Endesa CEO if Acciona/Enel bid
successful (Expansion)
-Televisa remains interested in acquisition of Endemol (Expansion)
-Indra to outsource services business to Latin America (La Gaceta de los
Negocios)
-Acciona does not rule out new acquisitions in energy sector after Endesa
buy (La Gaceta de los Negocios)
-OHL expected to win Algeria train contract (Neg-Ocio)
-Sabadell remains interested in acquisition of Bankinter (Neg-Ocio rumour
column)
-SCH to remove banking commissions in Portugal to attract 200,000 more
clients (elconfidencial.com)

MACROECONOMIC NEWS
-Spain April manufacturing PMI rises to 56.0 from 55.4

MARKET SENTIMENT
-The market is expected to open flat to slightly higher after another record
close for the Dow Jones, though trading will remain cautious ahead of key US
data later today and more corporate results from blue chip companies today and
tomorrow.
-On specific stocks, Gas Natural will be in focus on the news that Espirito
Santo acquired a 2.7 pct stake on behalf of Suez, according to a report in El
Economista. The newspaper cited unnamed market sources as saying the price paid
was 44 eur a share, representing a premium of 13.05 pct. The purchase was made
through a (share) cross after the market close Monday, dealers said.
-SCH will also be in the limelight ahead of US bank Sovereign's AGM when
shareholders are expected to decide on raising the Spanish bank's voting rights
to 24.9 pct from the current 19.9 pct, in-line with its stake.

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[waldron] 02/5/2007 18:01

Date : 02/05/2007 @ 17:27
Source : AFX


Madrid shares close higher on Wall Street gains; blue chips, media firm UPDATE


(Updates with full report)
MADRID (Thomson Financial) - Share prices closed higher, boosted by a firm
Wall Street performance, with the main blue chips and media issues leading the
pack, dealers said.
The IBEX-35 index closed up 42.3 points at 14,416.9, after trading in a
range of 14,363-14,462, on turnover of 5.8 bln eur.
Equities opened higher, boosted by a new record close on the Dow Jones
overnight, remaining up for most of the morning in quiet trade, with many
domestic investors still out on a local holiday.
The market slipped briefly into the red mid-session, on a dearth of
newsflow, but soon picked up over the afternoon on another strong performance on
Wall Street.
Media issues were in focus after News Corp's 60 usd per share offer for Dow
Jones yesterday put the sector in the spotlight, with Telecinco rising 0.26 eur
to 22.50, Prisa gaining 0.13 to 16.67, Sogecable up 0.45 or 1.50 pct at 30.43
and Antena 3 adding 0.26 or 1.65 pct to 16.05.
Leading blue chips were in demand, with Telefonica up 0.07 at 16.58, SCH
rising 0.07 to 13.06, Repsol YPF up 0.23 at 24.47 and BBVA 0.08 higher at 17.73.
Altadis rose 0.30 to 48.55, after Imperial Tobacco's CEO said he sees
progress in its attempted takeover of the company.
Inditex rose 0.67 to 46.05, while Iberia added 0.07 to 3.86.
Amongst blue chip losers, Banco Popular was off 0.03 at 14.56, while Indra
fell 0.01 to 18.14.
Selected constructors were also in the red, with Ferrovial down 0.75 at
79.35 and its Cintra unit off 0.09 at 13.10. FCC fell 0.70 to 67.90.
ACS bucked the broad sector trend, up 0.25 at 46.0, ahead of expected robust
first quarter to March results due tomorrow after the close, while OHL was up
0.97 at 33.97, on positive newsflow on US expansion plans.
Some real estate stocks remained on the sell list, with Urbas off 0.14 or
6.31 pct at 2.08, while Astroc fell 0.25 to 14.38. But other sector issues saw a
recovery from losses over the session, as in the case of Fadesa, closing up 0.05
at 27.40 and Inmocaral, up 0.04 at 4.31.

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[waldron] 02/5/2007 08:08

Spanish property wobble has parallels with the US Published: 07:00 Wednesday 02 May 2007
By Lorna Bourke, Money Columnist

The recent panic in the Spanish property market which saw the shares of Spanish property developers collapse, has worrying similarities with what is happening in the United States, and raises the real concern that property prices could collapse, affecting millions of property investors and those with holiday homes in the resort areas.

Property prices were already moving down and the recent sell off of shares in Astroc Mediterraneo, a Valencian property developer, where the price dropped some 60%, precipitated a wider sell-off in Spanish property and house building related shares.

The property market has certainly looked overheated showing a rise of more than 170% since 1997-98 during which time the UK market has seen a 100% increase. But the worry is that there is an oversupply of housing with some 620,000 homes being built a year, four times the rate in the UK, but with a population some 20 million smaller.

Last year more than 750,000 properties were started, more than three times the 200,000 annual builds, the long term average during the 1990s, and more than France, Italy and Germany combined.

With Spanish families, like the Brits, being heavily indebted, the fear is that there will be panic selling as owners see themselves facing negative equity, ensuring that house prices drop even faster. More than 95% of home loans in Spain are floating-rate, not fixed.

This is a very similar scenario to the US where rising interest rates have seen over a million homes being repossessed by the lenders.

Spanish investors are worried not only about property developers, but lenders too, as in the US, where some companies are already filing for Chapter 11 protection from their creditors.

Last week's panic sell off caused the share price of BBVA, Spain's second-largest bank, to dip on fears it is sitting on a pile of non-performing residential property loans.

So could the downturn in the property market in the US and Spain affect the economy at large? Construction and related industries represent a huge 18% of economic output in Spain, which has enjoyed 14 consecutive years of economic growth and accounted for a third of all new jobs created last year in the euro zone.

Over the medium term economist believe a dowturn in the property market will fuel unemployment as the labor-intensive industry starts laying off employees.

The Bank of Spain says Spanish homes are on average about 30% overpriced and that families with household debt of over 100% of disposable income, is one of Spain's most serious problems.

'Spanish housing is about to implode,' said Charles Dumas, chief economist at Lombard Street Research following the stockmarket collapse in property shares.

But is he right? And should those who own properties in Spain be worried?

'We have reached the position in some areas that unless a property is exceptional and ticks every box for the buyer, you will struggle to sell it at the asking price and will have to be prepared to accept less,' said Knight Frank research partner Nick Barnes.

Others believe the downturn was inevitable because of competition from other lower-cost holiday and retirement locations.

Adam Cornwell, director of GEM Estates, a specialist estate agent selling in emerging markets said: 'With countries on the brink of a boom such as Brazil, with unrivalled climate and beaches, offering apartments for as little as 45,000 euros, the investment case for the traditional markets such as Spain is blown out of the water in an instant.'

Not everyone agrees, however.

'This represents the start of a long anticipated correction in the market, and has been evident in accepted offers over the last few months,' said Tim Hodges, local director for County Homesearch Company in Spain. 'It offers clear evidence that the quality of housing stock must now be reviewed and that the issues concerning off-plan investors clouding the real marketplace must be addressed.'

'However, Spain still represents a good long-term investment and rental returns for holiday lets are superb, Hodges said. But this could be wishful thinking. As long ago as 2005, letting agents were warning of a glut of holiday properties in most areas of Europe.

'Buy yourself a holiday home for retirement but be realistic. There is plenty to choose from but you will be lucky to cover your costs with rentals let alone make any profit,' said David Buckley of villa rental company Palmer & Parker.

'In the last few years the villa rental market has been flooded with properties, the demand from tourists has dropped and it is likely to get worse. The number of new developments continues to grow and you could have real difficulty letting out an apartment with shared facilities like a pool.'

[waldron] 02/5/2007 07:48

RPT Madrid shares TFN at a glance outlook


(repeating to clarify Telefonica facing anti-trust issues in just Brazil,
not Italy)
MADRID (Thomson Financial) - Shares are expected to higher, with another
record session on the Dow Jones expected to lift European markets in early
trade, though trading in Spain will be light due to a holiday in Madrid, dealers
said.
Monday, the IBEX-35 index closed down 29.0 points at 14,374.6, after trading
in a range of 14,354-14,532, on turnover of 6.2 bln eur.

FORTHCOMING EVENTS
TODAY
-Madrid public holiday. Financial markets open
-Duro Felguera AGM in Oviedo, Spain (1st call)
-Spain's April manufacturing PMI

TOMORROW
-ACS Q1 results (After the close)
-Telecinco to pay total gross div 1.28 eur/shr

TUESDAY'S PRESS
-Union Fenosa chairman gives up voting rights to free ACS from possible
obligatory bid (Expansion)

TODAY'S PRESS
-Iberia sees Madrid-Barcelona passenger volume halving by 2008 (El Pais)
-Italy, Brazil call on Telefonica for details on bid for Telecom Italia
(Cinco Dias)
-OHL in talks for the acquisition of its third US constructor for 200 mln
eur (Cinco Dias)
-Cintra sees winning second Texas highway concession before end of Q2 (La
Gaceta de los Negocios)
-Spain's parliament to vote in new CNMV chairman Thursday (Cinco Dias)

LATE CORPORATE NEWS
-Spain April electricity demand up 8.4 pct yr-on-yr - REE
-Acciona FY 2006 total gross div 1.83 eur per share July 1
-ROUNDUP Imperial Tobacco CEO sees progress on Altadis bid
-Brisa chairman resigns from Abertis board

MARKET SENTIMENT
-The broad market is expected to open higher, boosted by a strong session in
US and Asian markets, and in light trade volumes with many dealers out for an
extended holiday in Madrid.
-Telefonica will remain in focus as analysts speculate on the strategic
rationale behind its acquisition of a stake in Telecom Italia and amid concerns
that the Spanish operator may face anti-trust issues in both Italy and Brazil.
-Altadis will once again be in the spotlight after the Imperial Tobacco CEO
said he sees "some progress" in the attempted takeover of the company.


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[waldron] 30/4/2007 17:07

Date : 30/04/2007 @ 17:01
Source : AFX


Madrid shares close lower in thin trade; Telefonica reverses gains


MADRID (Thomson Financial) - Shares closed slightly lower after a lacklustre
start on Wall Street amid mixed economic data and in thin trade ahead of a
two-day holiday in Madrid, as Telefonica reversed earlier gains, while Ferrovial
was higher, dealers said.
The IBEX-35 index closed down 29.0 points at 14,374.6, after trading in a
range of 14,354-14,532, on turnover of 6.2 bln eur.

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[waldron] 30/4/2007 14:24

From The Sunday TimesApril 29, 2007

Avoid the pain in SpainMerryn on Money
IN January, Dresdner Kleinwort, the investment bank, published a report called Spain: when will it end? Last week they may have got their answer.

On Tuesday Spain's leading stock-market index, the Ibex 35, was down 3.5% at one point, and ended the day 2.7% lower as investors panicked about the state of the property market and the real-estate sector plunged.

The five biggest property stocks ended the day down 20% or more. My guess is that, given how horrible the fundamentals of the Spanish property market are, they'll end the year down rather more.

The problem is twofold: afford-ability and supply. Having risen 270% in the past 10 years, houses in Spain are expensive on any measure. Average prices are about the same as in Britain despite the fact that average wages are lower. Even if they weren't, one would still expect values to fall.

Most markets move in cycles. As prices rise, more units of any given product – be it houses or hairbrushes – are produced until suddenly there is oversupply and prices start to fall. This is exactly what has happened in the Spanish housing market.

Ten years ago there was a supply shortage, and thanks to low interest rates, easy access to loans and high levels of immigration demand was picking up fast. The result was rising prices and – for some – huge profits.

Today things are different. Not only are interest rates no longer so low – they have risen seven times in the past two years – but there is no shortage of supply.

Far from it. The past decade has seen an extraordinary building binge with new developments sprouting up round the major cities and up and down the coast.

About 800,000 houses were built in Spain last year, five times as many as in Britain. Permission has been granted for another 800,000 this year.

Prices are already falling in many of the areas where foreigners most like to buy.

The Costa del Sol is probably the dodgiest place to be at the moment. Developers are offering huge discounts to get new-build properties away and most forecasts have prices falling by at least another 10% or so this year.

I'd say that is optimistic given supply is not only high but getting higher and the stalwarts of the Spanish coastal market, the British, are fast abandoning what they see as an expensive and corrupt market. They are making their way farther afield to eastern Europe and Latin America.

Two years ago it took three months to sell the average home in Spain. Today it takes twice that.

None of this is to suggest that homeowners in Spain should automatically panic. If you like your holiday home and want to keep it, its market value shouldn't really matter because it is a question of utility not money.

If you bought ten or even five years ago you are sitting on a huge capital gain so can easily afford to take a bit of a hit on your property's peak valuation if you want to sell.

The only people who really need to worry are those who have bought as an investment in the past couple of years and those thinking about buying now. The latter might want to think about renting a villa over the summer instead.

However, look beyond the residential property and there is another group who really should consider panicking: Spain's stock-market investors.

Clearly the construction sector is in trouble. It is heavily indebted and the assets supporting that debt look set to lose value fast. The banking sector also faces difficulties; it has lent heavily to the sub-prime sector in the retail market and to construction firms and developers.

Spanish personal debt has risen by 250% in the past decade and, as interest rates rise, it is inevitable that defaults will too. More than 90% of Spain's mortgages are on variable rates.

Even outside these two obvious sectors there is reason to worry. In the corporate sector as a whole borrowing is growing at a record rate – an annualised 30% – and debt now stands at 100% of GDP, the highest level in the EU, according to Dresdner Kleinwort. In Britain, by comparison, it is more like 85%.

The upshot is that Spain's economic growth, which on the face of it is pretty healthy, is dependent almost entirely on the rising debt levels of the corporate and household sectors. That's not good when interest rates are rising and asset prices falling.

Profit margins are already beginning to contract. Worse from the point of view of investors, Spanish shares aren't cheap. Several analysts suggest they need to fall 20% just to get back to any kind of "fair value".

Several days before Spain's troubles hit the headlines I hada conversation with Simon Pick-ard, manager of the Argos Greater Europe fund. We discussed all these things.

"The writing has been on the wall for a long time," he said, "you'd need your head examined to put any money in the Spanish market at the moment."

That's just as true this week as it was last week. The Ibex is still up 7% this year so it has plenty of room to fall.

Merryn Somerset Webb is a former stockbroker and now editor of Money Week. Her views are personal and investors should always seek professional advice.

[waldron] 30/4/2007 09:13

Date : 30/04/2007 @ 08:04
Source : AFX


Madrid shares TFN at a glance outlook


MADRID (Thomson Financial) - Shares are expected to open higher on a
technical recovery from Friday's sharp losses and buoyed by record gains Friday
on Wall Street, dealers said.
Friday, the IBEX-35 index closed down 207.4 points or 1.42 pct at 14,403.6,
after trading in a range of 14,342-14,618, on turnover of 6.8 bln eur.

FORTHCOMING EVENTS
TOMORROW
-Public holiday. Financial markets closed.
-SCH goes ex-div for 0.199 eur/shr

TODAY'S PRESS
-Morgan Stanley launches bid for 49 pct of Codere (Expansion)
-BBVA's Gonzalez rejects stake buy interest on behalf of local property
businessmen (elConfidencial.com)
-EDP calls on Spain energy sector watchdog to limit Iberdrola voting rights
to 3 pct (Cinco Dias)
-Sacyr might lower acceptance threshold on Eiffage bid - CEO (Financial
Times)
WEEKEND PRESS
-Metrovacesa buys HSBC London HQ for 1.6 bln eur (Weekend edition La Gaceta
de los Negocios)
LATE CORPORATE NEWS
-Telefonica upped to 'overweight' from 'neutral' by HSBC, tgt 19.8 eur vs
17.8
-Avanzit renews contract with Telefonica for further 10 yrs for 600 mln eur
-Spanish government grants Enel full voting rights in Endesa
-Pirelli sells 18 pct in Telecom Italia for 4.1 bln eur to Telefonica,
others
-OHL's unfortunate timing for inaugural Eurobond - Thomson Financial's
International Financing Review

MARKET SENTIMENT
-The broad market is expected to open higher on a technical recovery from
Friday's losses and buoyed by strong gains in the US at the end of last week.
-Focus will be on Telefonica amid the news the telecoms giant has finally
closed a deal in Italy, acquiring 10 pct of Telecom Italia for 2.314 bln eur.
The Spanish firm will now be in pole position to grab Telecom Italia's Brazilian
assets.
Many analysts also view the deal as the first "good faith" gesture on behalf
of the Italian government towards Spain, after Enel was effectively given the
green light to acquire its stake in Endesa, pushing E.ON out of the picture.
[e-mail]
ped/jdy/jlw/cve/ccs/bsd/jdy/jr

[waldron] 26/4/2007 12:00

Alcatel-Lucent completes cable network that can boost Vivendi's Maroc Telecom


PARIS (Thomson Financial) - Alcatel-Lucent said it has completed the
installation of a 1,630-km submarine cable network between Morocco and France
that will enhance the ability of Vivendi unit Maroc Telecom to provide
high-speed internet and other services.
[e-mail]
mjs/jag

[waldron] 25/4/2007 16:12

From Times OnlineApril 25, 2007

Fears grow of Spanish property crash
Second homeowners at risk as Spanish stock market losses raise fears that the country's housing bubble is set to burst
Costa living: one-bed flats in El Campanario are £157,000
Andrew Ellson and Lucia Adams
Panic selling of property-related companies on the Spanish stock market this week has raised fears that the country's housing market is set to crash, potentially hitting tens of thousands of Brits with second homes on the Costas.

The value of Spain's leading developers has slumped by as much as 65 per cent with analysts worried about levels of debt and a massive over-supply of properties. The concerns drove Madrid's IBEX index 2.7 per cent lower yesterday.

The Spanish construction industry is expected to churn out 800,000 properties this year, 200,000 more than last year.

Diana Choyleva, director and chief economist at Lombard Street Research, believes the Spanish housing market is about implode.

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"It is not good news for UK investors in Spain. The problem is in supply. We have had over investment on a gigantic scale and it has already started a slowdown in house price growth.

"We will definitely see house price growth stop and falls in nominal prices are likely in Spain over the next 12 to 18 months."

An estimated 250,000 British citizens own properties in Spain with many having benefited from prices that have risen by an average of 10 per cent a year over the last five years. In some areas prices have risen by 270 per cent over the last decade.

Spain has long been the destination of choice for Britons. However, land scandals and the attraction of less expensive emerging markets have meant that demand from British buyers has declined in recent years.

Last year corruption on the Costa del Sol left British property owners fearing for their Spanish boltholes after homes were built illegally on protected land.

The Ley Reguladora de la Actividad Urbanistica (LRAU) - or land grab law - has also left some Britons out of pocket: the law can demand in certain cases that owners cede part of their land to the town hall while receiving as little as 10 per cent of the value of their property in compensation. In some cases owners have found themselves liable for the part of the cost of redeveloping what was their land.

Maria Tujillo, Spain's housing minister, attempted to allay fears over property prices, saying the market was heading for a soft landing rather than a crash.

Useful links:

www.expatica.com - for British expats in Spain

www.spanishpropertyinsight.com - news on the property market

www.kyero.com - analysis of regional house prices

www.isutus.com - Spanish property portal

[waldron] 24/4/2007 12:34

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 [e-mail] ; Jeffrey T. Lewis in Lisbon [e-mail]

Last Updated: April 24, 2007 05:57 EDT

[waldron] 08/4/2007 08:54

Poland leads property boom

This is Money
6 February 2007
The European housing market shrugged off forecasts of a slowdown in 2006, with solid house price performance recorded across the continent, according to a new report.



A graph of property price rises for Western European countries 2005/2006





The Royal Institution of Chartered Surveyors (Rics) said the UK outperformed the other 'big four' Euro-zone states but that the highest annual inflation was seen in Scandinavia and Central and Eastern Europe. In its annual European Housing Review, Rics found that interest rate rises and a supply increase in several buoyant housing markets did little to slow solid house price inflation during 2007.

Despite most markets not reaching the high levels of house price inflation witnessed in 2005, many areas still offered investors double digit annual growth.

Of the big four, only the UK outstripped its 2005 performance, with prices rising by 10%, up from 3% in 2005. This was on the back of a 'dire' land and new housing predicament, with a lack of supply artificially inflating the market, the report said.

Annual house price inflation dropped to 7% in France (12% in 2005), fell back to 4% in Italy (5% in 2005), while the market remained stagnant in Germany. Prices in Spain rose 10% compared to 15% in 2005 while values in Portugal actually fell slighty after climbing only 2% in 2005.



Scandinavia continued to show impressive house price inflation, recorded at around 22% in Denmark, 17% in Norway and 11% in Sweden.

But they failed to catch up on growth in parts of Central and Eastern Europe. House prices in Poland rose by 33%, having already risen 28% in 2005. Warsaw, the capital, saw prices rise by a third and even more in Krakow.

The Mediterranean islands of Malta and Cyprus had significant price rises again, 'reflecting their attractiveness to English speaking sun-seekers'. Prices in Nicosia in Cyprus rose 8% in 2006 compared with 12% in 2005.






A graph of property price rises for East Europe countries


It was also a strong year for Europe's lenders. Despite rate rises by the European Central Bank, mortgage debt saw rapid growth, with lending figures in eight out of the 12 Euro-zone countries rising at double digit rates in 2006.



The report's author, Professor Michael Ball, said: 'In the main, Europe's housing markets had another strong year. The long predicted soft-landings have yet to materialise, with the European Central Bank interest rate rises having little effect in the Euro-zone so far.'



Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, said: 'Fears of a considerable house price slowdown in what are considered as over-heated markets of the UK, Spain and Ireland, once again proved to be quite off the mark of actual development.

'Rising income and employment levels have cushioned these and other markets across Europe from rising interest rates, and the prospects for 2007 remain good as many economies have entered the year on a firm note.'



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