Protectionism in Spain's Capital Markets

WSJ ^

[Sean Flynn]

LONDON -- When Spanish stock-exchange operator Bolsas & Mercados Espanoles lists shares on its own market today, opening itself to investors for the first time in its 170-year history, it will do so under one condition: You must ask permission to buy more than 1%.

The Spanish government put the requirement in during May as BME, based in Madrid, was gearing up for its market debut. Under the rule, no investor can build up a direct or indirect stake of more than 1% in BME without consent from the country's market regulator, the Comision Nacional del Mercado de Valores, or CNMV. The CNMV has to approve each further percent bought by any investor, up to 5%, and each 5% thereafter.

[Sean Flynn]

This is why Spain's capital markets will never compete with New York, Luxembourg, or Lisbon.

[beeler]

The Spanish would rather lose money than have to interact with foreigners.

[expat_panama]

This is actually consistent. It's a protectionist measure that should to reduce their trade deficit. The fact that it'll also bring about high unemployment, lower wages, etc. has never been a problem before. Why should it be a problem now?

[livius]

Well, heck, Bambi wouldn't want his country to be a successful capitalist model - gasp - would he?

For those who don't know, Bambi was a name given to Zapatero because of his deer-in-the-headlights eyes and his can't-we-all-just-get-along stupidity.

[1rudeboy]

Spain appears to be doing rather well, in terms of GDP growth, an inflation problem "looming" just as ours, but an above-average (EU) unemployment rate. It will take some more time for Zapatero to undo the progress Aznar made.

[Paul Ross]

Mi>It's a protectionist measure that should to reduce their trade deficit. The fact that it'll also bring about high unemployment, lower wages, etc. has never been a problem before. Why should it be a problem now?

They are communists merely following in the winning footsteps of their comrades in China, who are quite pleased to keep wages low. Their peasants are used to them by now.

As for Europe, we'll see if the low wages eventuate. My guess is that it goes the other way, since their government does have to answer to the voters, unlike our NAFTA/CAFTA crowd...who have rigged the game by bribing off both parties.

[expat_panama]

All I can say is that if this sparks a 'trade war', with the NSYE refusing to sell stocks to Europeans, then I'm selling all my stock and buying gold.

[yankeedame]

It will take some more time for Zapatero to undo the progress Aznar made.

Are you kidding? He's a socialist. When it comes to that sort of thing they've got the touch.

[Paul Ross]

I'm not. I'm buying oil.

[expat_panama]

...our NAFTA/CAFTA crowd...who have rigged the game by bribing off both parties...

Paraphrasing, bear with me.  Someone asked Reagan whether he led the country like donors wanted when big bucks went for his campaign.  He said that big bucks went into his campaign because donors liked the way he led the country.

I don't call that "bribing".

[Paul Ross]

Are you kidding? He's a socialist. When it comes to that sort of thing they've got the touch.

Bump!

They likely will have to start buggering the elections like they are in Venezuela...

[expat_panama]

good time to short euro stocks?

[SAJ]

Dunno. I own a couple -- for the dividend -- and they're not doing much of anything. ECB are being very coy about raising rates, which has resulted in USD becoming far more attractive to capital than is Wonderland just now. I expect US short rates to continue to rise, certainly through the next 2 FOMC meetings, which will compound this effect. ECB are basically scrod right now (no, that's not a fish served in Boston); if they start raising rates, all they'll do is scare traders while simultaneously slowing down their economies and jacking up their costs for their idiotic social schemes. Rock and a hard place.

Unlike some, I do not subscribe to the notion that event risk to Euro shares (presumably from a Mideast war) is somehow outsized. No worse than any other shares, as a group, in my view. Stay long the oil svc equipment sector, the Canadian mineral trusts, PBT, and Anadarko. It's a bit late to buy Slumbugger, but vertical call spreads ATM/ITM in SLB will probably do nicely for some time w/in next 90 days. However, these are ho-hum yawners, comparatively.

I think the real action is going to be in C$, A$, and Yen. Right now, this minute, JY IV is crashing, and that, as a certain ex-felon CEO might say, ''is a Good Thing''. Next week sometime, in full accordance with my straddling strategy as described in ''Don't Just Stand There--Do Something'' in the book, I'm loading up on the ATM JYZ straddles. This is effectively free money, and you can confirm the historical accuracy of the trade using 'The Big Enchilada' at Time & Timing . Take the free trial, short sign-up (we need an e-addy for admin purposes, but that's it), then login, click on The Big E, checkmark Currencies, Yen, and December for the contract month, and change the ending date to Dec 1. You'll see it straightaway.

The JYZ strads (ATM = 88.00 strike) settled @ 373 pips tonight ($4662.50), just 4.23% of the contract value. Can probably get 'em done @ 375-380 Monday, barring a huge development over the weekend, which doesn't seem in the cards for JPY. This is a honking gift, mate.

Good trading to you!

[expat_panama]

Printed it out.  Rereading Chapters 8 & 9.  Thanks.

I knew this freerepublic was good for something...