The Ibex 35 is the benchmark stock index of the Spanish stock market. It is prepared by the BME company with the objective of observing the profitability of Spanish shares. It shows the state of the stock market and is a good indicator of the state of the Spanish economy.
This benchmark index, the Ibex 35, was created in 1992 and its name derives from the Spanish Stock Market Index, which integrates the quotes of the 35 most important companies in Spain. The Ibex 35 is a weighted index according to the market capitalization of the 35 companies that compose it, that is, the companies that have a greater capitalization have more weight in the index.
The companies that make up the Ibex 35 are established through the Technical Advisory Committee of the Exchange, who, based on a series of determined criteria, assesses the weight of the companies in the stock market. These guidelines mainly include the volume of shares, their degree of liquidity and market capitalization . This Committee meets every six months on an ordinary basis and whenever necessary in an extraordinary manner due to market movements.
For their part, large companies are always very interested in belonging to this select group of 35 companies that make up the Ibex 35 (hence this index is also known colloquially as the selective ). Because joining this corporate elite means enjoying great prestige at national and international level and, at the same time, a sure guarantee that the business management that is being carried out in society is correct.
The Ibex 35 serves as a reference point for investors in the Spanish market. The profitability of this index is the objective to beat by the managers. Since if the profitability of our portfolio were lower than that of the Ibex 35, it would be better to invest directly in the index through a financial derivative .
Historical and graphic data of the Ibex 35
The Ibex began trading on January 14, 1992, but historical data were calculated from January 5, 1987. The day chosen as the basis was December 29, 1989, the day on which an index number of 3000 points Since then its value has not stopped changing, reaching a maximum of 15945.7 points on November 8, 2007 and a minimum of 1873.58 points on October 5, 1992. If we had bought at the minimum and sold at the maximum our money would have multiplied by 8.5.
Other Spanish stock indexes
But in addition to the Ibex 35 index, in Spain there are other stock market indicators that are gaining weight as a financial reference. Thus, we have the Ibex Medium Cap index (before 1995 known as Complementary Ibex) and the Ibex Small Cap index, which maintain the main challenge of observing the evolution of companies with medium or small market capitalization or, what is the same , the measure of the economic dimension of a company, of the four Spanish stock exchanges – Madrid, Barcelona, Valencia and Bilbao – that are listed on the Stock Market Interconnection System, an electronic platform created for the negotiation of equity securities.
These indices, therefore, offer us additional information about the evolution and the real state of the Spanish markets, and as a consequence, of the economy of the country. However, the membership of a company in these indices depends on complying with a series of requirements: not being integrated in the Ibex 35, having a percentage of floating capital greater than 15% and an annual turnover of floating capital greater than 15%. In this way, the securities that meet the relevant conditions are ordered by their market capitalization, including the first 20 in the Ibex Medium Cap and the next 30 in the Ibex Small Cap.