Spain’s retail deposits to spike as consumers prioritize safety, says GlobalData

Despite the COVID-19 outbreak, the Spanish retail savings and investment market in 2020 is expected to witness growth as per the revised forecasts. However, this growth is mainly attributed to the increases in the retail deposits. The country has been hit harder than most European countries, due to severe infection rates and an already frailed economy with high unemployment, says GlobalData, a leading data and analytics company.

According to GlobalData, the total size of the market is expected to grow by 1.4% in 2020, compared to 2.5% before the pandemic. However, retail equity growth was revised down from 0.1% to -22.6%, as consumers choose the safest possible options.

Heike Van Den Hoevel, Senior Wealth Management Analyst at GlobalData, comments: “Equities are forecast to take the biggest hit as the nationwide lockdown has caused a major loss of activity across industries. The IBEX35, the country’s flagship index, has lost 28% of its value year to date as the government put the economy into a deep sleep. While the index recorded positive growth at the beginning of April of the back of slowing infections, gains were less pronounced in the wider region.”

Retail deposits, which already made up 55.0% of retail holdings as of 2019, will benefit from a flight to safety. Similarly, bonds are expected to benefit, though to a lesser degree.

Van Den Hoevel concludes: “The impact on bonds, which is considered a safe investment, will be marginal given retail investors’ limited interest in direct fixed-income products. Instead of a 21.4% decline, we now expect bond holdings to decline by 2.3% in 2020.”

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