However, Spanish stocks aren’t without their risks. One potential roadblock on the horizon for both Spanish and European stocks: An upcoming ruling from the German constitutional court on the legality of the ECB’s proposed asset purchase program.
In addition, until we see more aggressive measures from the ECB to boost lending to small- and medium-sized enterprises in Southern Europe, it’s hard to envision a quick turnaround for the region.
However, Europe has one distinct advantage to domestic equities: market watchers’ low expectations. In the current environment, even modest signs of good news can have a positive impact on European equities in general and on Spanish stocks.
iShares MSCI Spain Index Fund (NYSEArca: EWP)
Russ Koesterich, CFA, is the iShares Global Chief Investment Strategist.