La Opinion de Malaga article by CCG

English translation:
The Stock Exchange Recent Upward Trend
Investor confidence is on the increase, but Spain still needs solid structural reforms

Analysts have been treading very carefully around the events which have been taking place over these first three months of the year. During the first two months, the stock exchange trend was largely negative and experienced sharp falls. This was predominantly caused by the avalanche of negative macroeconomic data and the bad news coming from the USA, where all major banks have been suffering large-scale liquidity and solvency problems since the end of 2008.

Armed with such negative data, uncertainty took hold of the market. During the last two weeks of February and the first week of March, there have been severe falls on the stock exchange and the IBEX (Spanish Stock Market Index) lost 7,000 points.

Throughout the last three weeks in March, the trend has been reversed due to by positive news from the most important American banks, which announced profits during the first two months of this year.

Additional good news include an improvement in investor confidence, a slight increase in retail sales and the positive statement from the Federal Reserve announcing that the American economy will pull through the crisis by the end of 2009. This week, this worthwhile news has allowed us to exceed once more the barrier of 8,000 points.

Tax Incentives. Unfortunately, the situation of the Spanish economy is not nearly as promising as that of the USA. As much as the Government made an important contribution by increasing public expenditure, public employment, regional budgets and extending public credit sales for the banks, with public deficit hitting 7% we have very little room left for manoeuvring.

It is necessary for Spain to implement substantial structural reforms which will serve as a tax stimulus. Banks, the private sector, unions and the Government must be brought together to reach a consensus on which measures to take in order to escape this crisis we are immersed in.

Carlos Jiménez
Jefe Depto. Fiscal & Contable
Manager Accounting Dept.

Paseo de la Castellana, 141
Edif. Cuzco IV, 8ª planta
28046 Madrid

Avda. Severo Ochoa, 28
Edif. Singlehome, 4º C
29603 Marbella, Málaga
Tel: +34 902 486 000

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