Focus article by Jonathan Lopez
Disappointed supporters of Catalonia's independence follow the regional president's speech. Source: Danilo Balducci/ZUMA Wire/REX/Shutterstock
LONDON (ICIS)--The Spanish stock exchange was trading higher on Wednesday morning as the president of Catalonia suspended the region’s independence soon after declaring it as he asked the central government for “dialogue” for an ordered withdrawal.
Spain’s IBEX 35 was trading 1.55% up by 10:45 local time, while the euro was also trading slightly higher against other major currencies.
When the Catalan president addressed the regional assembly and declared independence, the markets were closed but the IBEX 35’s futures fell sharply soon after his words (see graph from Spanish financial daily Cinco Dias).
However, futures moved sharply higher when two minutes later he said the declaration would be suspended, the futures went sharply higher, a positive mood that persisted among Spanish investors on Wednesday.
Other stock exchanges in Europe were barely moving, with Germany’s DAX up 0.03% in morning trading, France’s CAC 40 down 0.19% and the UK’s FTSE 100 down 0.03%.
According to figures from the Catalan government, 43% of voters (2.26m) in the region cast their vote on 1 October, with 90% of them (2.02m) voting for independence, less than 40% of the 5.5m-strong electorate.
However, the lack of a minimum quorum has overshadowed the vote, which was also met with a violent response from the police, causing further backlash from supporters of independence.
“We propose the suspension of the effects of the declaration of independence for a few weeks, to open a period of dialogue,” said the regional president Carles Puigdemont.
“If everyone acts responsibly, the conflict can be resolved in a calm and agreed manner. I want to send you a message of calmness and respect; of the will for political dialogue and agreement.”
In a dramatic evening when those expending a full independence declaration were left disappointed, the Spanish government already said that there would be nothing to negotiate as the vote had been declared illegal, as well as the law it was organised under.
“Neither Mr Puigdemont nor anyone else can draw conclusions from a law that doesn’t exist, from a referendum that hasn’t taken place,” said the Spanish deputy Prime Minister on Tuesday evening.
Dialogue was precisely what the president of the Port
of Tarragona, south of Barcelona and host to one of the
largest chemical parks in Spain, had asked from Spanish and
Catalan leaders in an interview with ICIS on 2 October.
The Spanish government was holding an emergency meeting at the time of writing, but analysts in Madrid have said one of the options now would be to suspend Catalan autonomy – effectively, imposing direct rule to call a regional election soon after.
However, that option may infuriate further supporters of independence, who hold dear the numerous devolved powers recovered by Catalonia when democracy was re-established in the 1970s.
The Spanish Prime Minister Mariano Rajoy is due to address the national Parliament later on Wednesday.
The Spanish chemical trade group FEIQUE was not available for comment at the time of writing.
London-based analysts at Germany’s investment bank Deutsche Bank said on Wednesday the Catalan president had “increasingly been boxed in” by differences of opinion within his own government coalition as well as the fact that heavy weights of the Catalan business sphere had announced they would move their legal bases out of the region.
Among others, energy major Gas Natural and the main two Catalan banks, CaixaBank and Banc Sabadell, had announced last week they were moving their headquarters elsewhere in Spain. In total, six out of seven IBEX 35 Catalan companies announced that intention. The main index gathers the 35 largest Spanish companies.
“Given that his options had seemingly been reduced over recent days he played his hand relatively well by saying the referendum had given the region a mandate for independence but that they would hold off for now to enter into dialogue with PM Rajoy and his administration,” said the Deutsche Bank analysts.