Wednesday, August 7, 2013

A Potential Signal To Buy Southern European Equities

As the WSJ reports.



Spanish officials managing soured assets from the country's real-estate collapse announced their first big property deal, choosing Miami-based private-equity firm H.I.G. Capital to buy a majority stake in a package of 939 homes known as Project Bull.

Further still........

Property experts called the agreement a benchmark deal for Spain because it will set precedents on price levels for transactions carried out by Sareb, which was set up by the government as part of last year's €41.3 billion European Union bailout of the country's banks. Sareb took on foreclosed property and bad loans to real-estate developers from the weakest Spanish banks.

In my opinion, the events described above are a positive sign for not only Spanish real estate but also the outlook for equities out of Sourthern Europe. At the very least, the buying of distressed properties by investors should be considered a beacon stating- watch the events here closely. For reference, the Spanish equities (as characterized by the Ishares MSCI Spain ETF, ticker EWP) has traded flat for essentially three years. A breakout above $33 would suggest higher prices in the offing.


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