Spain Catalan Vote: Pressure On Spain
Published: September 29, 2015
Spain Catalan Vote: Pressure On Spain, Spanish financial markets rallied on Monday after regional elections in Catalonia, welcoming a result that, while giving secessionists a parliamentary majority, appeared not to have advanced a broader case for independence from Spain.
Stock and bond investors have been concerned that a breakaway movement gathering pace in the region could cause political and financial instability in the euro zone’s fourth largest economy.
Secessionist parties won 72 of the 135 seats on Sunday in the legislature of Spain’s wealthiest region, prompting the acting head of the regional government, Artur Mas, to claim the result as a “yes” for independence. He is expected to push ahead with his campaign.
The same parties won only 47.8 percent of the vote, and analysts suggested that statistic had removed any immediate risk of a breakaway which, in view of constitutional hurdles and steadfast opposition from central government in Madrid, remains purely hypothetical.
The result, in a record turnout of 78 percent, was however likely to strengthen the hand of the regional government in negotiations with Madrid over devolutionary concessions, they said.
“What came out from the local elections is that there is a majority for independence parties, but at the same time they did not reach an absolute majority,” BNP Paribas rate strategist Patrick Jacq said.
“If there is a referendum for independence, it’s not clear that “yes” would win. There is no signal that Catalonia wants to be independent.”
Spain’s banks, including some based in the Catalan capital Barcelona, have warned secession could cause financial turmoil and the Spanish central bank has said the region risked exiting the euro.
Shares in Catalan banks Caixabank and Banco Sabadell outpaced the market on Monday, up 0.7 percent and 0.4 percent respectively.
Overall, Spanish stocks did likewise, up 0.1 percent as other European shares fell due to global growth concerns, with Germany’s main DAX index down 1 percent. [.EU]
While Catalan 10-year bond yields rose more than 15 basis points at 4.16 percent, they retreated from the highs of about 4.25 percent hit at the open. Equivalent Spanish yields fell 8 bps to 1.95 percent, outperforming most other euro zone government debt.
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