BlackRock’s Nigel Bolton deploys analysts to Spain
European equity veteran warns Spain could fall into a Irish-style crisis.
BlackRock’s head of European equities Nigel Bolton is dispatching analysts to Spain to gauge whether there are investable opportunities amid the nation’s deteriorating financial crisis.
Mr Bolton, who heads the group’s €2.4bn Luxembourg-domiciled BGF European fund, spoke a day before the Spanish government was forced to deny reports of a run on part-nationalised lender Bankia.
“We have two of our analysts flying to Spain soon as we see value there but we need clarity around the political and economic situation.”
But he said “they have to address the financial system”.
“In the past few days, we have started to see increased provision for Spanish banks forced upon them by the government but we have not seen recapitalisation,” he said. “The question is will it become another Ireland where the private sector was taken over by the state? That’s a worry the market has.”
Mr Bolton said he views Spanish banks as “pretty uninvestible”, as well as domestically focused companies in the bourse.
“We have some exposure but to companies like Amadeus, which only has 10 per cent of its revenues coming from Spain,” he said.
Amadeus is a Madrid-based global distribution system for travel reservations.
Elsewhere, Mr Bolton said Italy – where government bond markets recently teetered on the brink of a default crisis – had made “fantastic progress” in the past six months, particularly compared to Spain.
“I am much more confident Italy is a long way down the road to sorting out the situation there,” he said.
“They are getting tax revenues in and the industrial structure of Italy is better than Spain and definitely Greece. Italy is on the road to recovery.”
Mr Bolton also issued a bullish outlook for European equities overall.
“I know great value when I see it”, he said. “When people are fearful, be greedy. I see fear and people saying they don’t want to invest in Europe.”