MADRID: Spain is one of the most popular destinations in the world for a beach holiday, but its business climate is less welcoming at the moment, thanks to a huge hedge fund bet.
The world’s largest hedge fund, Bridgewater Associates, has bet $22 billion that the share prices of several European companies will go down. The position includes $1.7 billion focused on Spanish companies, including a $750 million bet against Spain’s largest bank, Banco Santander.
Spain’s was among the most-affected economies in the 2008 global financial crisis. Since then, tourism and foreign investment have played strong roles in Spain’s recovery.
In recent years, exports have been on the rise from 25 per cent of GDP to around 33 per cent. The momentum for economic growth and job creation has taken off.
However, the encouraging upward growth in Spain didn’t stop Spain’s sixth largest bank, Banco Popular, from facing a crisis last summer for holding more than €37 billion in bad loans left over from the housing crisis.
Banco Popular was acquired by Banco Santander, a move that observers have praised since it helped avoid a taxpayer bailout.
But ultimately, the Banco Popular debt crisis begs the question: how toxic is the debt on Spanish banks’ balance sheets from the previous crisis and will other lenders run into similar troubles?
Spain is now the third most visited country in the world. Tourism accounts for as much 14.4 per cent of the country’s GDP. Last year, Spain saw almost 75 million visitors, of which nearly 17 million were British.