What Is the IBEX 35 Index?

For traders who are seeking access and exposure to Spain's biggest and most liquid companies without having to own them, the IBEX 35 (Spain 35) index may be the right fit. Here's what you need to know about this stock market index:

Key Takeaways:

• The IBEX 35 is a stock market index that was launched on January 14, 1992, with a base value of 3000 points and tracks 35 of Spain’s most liquid companies.
• This index can reflect the health of the economy and tracks multiple sectors like finance, consumer goods, and energy.
• This index is market-capitalisation weighted and its constituents are updated every 6 months.
• Traders can access the index through futures, options, ETFs, and CFDs.

IBEX 35 Explained: What Is the IBEX 35 Index?

The IBEX 35, otherwise known as the Iberian Index, is a stock market index that gauges the trajectory of 35 of the most liquid companies in Spain. These companies are traded on the Bolsa de Madrid stock exchange and are considered the biggest companies in Spain.

The Importance of the IBEX 35 to Traders and the Economy

Since the IBEX 35 gauges the performance of Spain’s top 35 leading companies and encompasses companies from various sectors like finance, real estate, oil (CL) and energy, and consumer goods, it can serve as an important economic health indicator that reflects the Spanish economy, and the European economy, as a whole.

As such, traders may find this index of interest due to the fact that it can help them understand the economy better, make more informed trading decisions, and help them navigate volatile markets.

History of the IBEX 35

The IBEX 35 index has a rich and longstanding history. Here are some of its historical highlights:

• January 14, 1992: the IBEX was launched, though data suggests that it had calculations dating back to December 29, 1989, and its base value was established at 3000 points.
• November 2007: the Ibex index reached an all-time high of 15,945.70.
• January 21, 2008: the IBEX fell 7.5% to mark the second-worst fall in Spanish equity markets since 1987. However, this sharp fall was then counteracted three days later as the Spanish index rose by 6.59%.

As of November 2023, this index’s price is in the 9000 points range.

How Is the IBEX 35 calculated?

Understanding how the IBEX is calculated and the IBEX 35 price is an integral part of grasping how the benchmark stock market index of the Bolsa de Madrid works.

The IBEX 35 is a market capitalization-weighed index, as such, its value is based on the companies' valuations and market capitalizations.

First, in order to determine the companies’ weights, the total value of the free float market capitalizations for all 35 companies is initially calculated. Afterward, each company’s weight is then computed by dividing its free-float market capitalization by the total value of all 35 companies.

Finally, to calculate the index’s level, the total free float market capitalization of all 35 companies is divided by the same value during a reference period and then multiplied by the index level corresponding to that base period.

The mathematical formula for this goes as follows:

In this formula, T refers to the time of calculation, Cap refers to the free-float market capitalization of a specific company listed on the IBEX 35 index, and J is the coefficient that aims to adjust the index to ensure its continuity in response to capital increases or other corporate actions.

IBEX 35’s Prominent Companies

As mentioned above, the IBEX 35 includes 35 of Spain’s biggest and most liquid companies, which means that most of the stocks on this index can play an important role in the Spanish market.

However, there are some IBEX 35 companies that may be considered among the most popular in terms of their prowess and impact. Here are some of IBEX 35 stocks worth knowing as of November, 2023:

• Telefonica (TEF.E)
  Among the largest telecommunication companies and mobile operators worldwide, Telefonica is a Madrid-based company founded in 1924.
• BBVA (BBVA.E)
  Banco Bilbao Vizcaya Argentaria (BBVA), which was established in 1857, is one of the biggest financial institutions in the world and it is a Spanish financial services company based in Madrid and Bilbao.
• Santander Group (SAN.E)
  Santander Group was founded in 1857 and is a Spanish multinational financial services and commercial banking company based in Madrid and Santander. The company is considered one of Spain’s and the world’s biggest financial institutions.
• Grifols (GRF.E)
  Grifols is a Spanish multinational pharmaceutical company that was founded in 1940 and is famous for its development of blood-plasma products.
• Acciona S.A. (ANA.E)
  Acciona was founded in 1997 and is a Spanish multinational infrastructure company that offers construction, renewable energy, and water among other services.
• Acerinox (ACX.E)
  Acerinon was founded in 1980 and is a Madrid-based Spanish company that manufactures stainless steel.
• Amadeus IT Holding (AMS.E)
  Amadeus is a leading Spanish multinational tech company that specializes in software development for the tourism industry. The company was founded in 1987 and is headquartered in Madrid, Spain.
• Iberdrola (IBE.E)
  Iberdrola is an electricity utility company, founded in 1992, and headquartered in Bilbao, Spain.

Other notable mentions on the IBEX 35 may include Cellnex Telecom S.A. (CLNX.E), a telecommunication company, and Enagás ENG.E (ENG.E) an energy company.

How Often Are Companies Added or Removed From The Index?

Every six months, the Technical Advisory Committee examines the 35 most liquid companies in the Spanish stock market and updates the IBEX 35 components accordingly.

What Can Affect the IBEX 35 Index?

Like many stock indices, the IBEX 35 prices can be affected by factors such as monetary policy changes, inflation, interest rates, geopolitical changes, news, or events, economic data releases (such as earnings, GDP, or CPI), and general market sentiment (whether traders are bullish or bearish on certain IBEX 35 companies).

To read more in-depth about what can shift stock indices’ prices, check out our “What Moves an Index’s Price?” article.

How to Trade the IBEX 35

Due to the fact that the IBEX 35 is a leading market index and tracks some of Spain’s major companies, traders and investors alike may want to learn how to trade it or potentially benefit from its price movements.

While there are many ways to access the index like IBEX 35 Futures, Options, or ETFs, Plus500’s fintech group offers IBEX 35 Contracts for Difference (CFDs).

CFDs are derivative contracts that allow traders to trade on rising or falling index prices without having to actually own them. To learn more about CFDs check out our Trader’s Guide video and article - “What Is CFD Trading?”

Another way to potentially benefit from the IBEX 35 is through trading CFDs on the stocks of the IBEX 35 companies.

Conclusion

To conclude, the IBEX 35 is considered a notable stock market index that not only tracks Spain’s biggest and most liquid companies but also Spanish companies that are considered to be big worldwide. Traders may gain access to this index through Plus500 IBEX 35 (Spain 35) CFDs.

FAQs:

• How is the IBEX 35 calculated?

  The IBEX 35 operates as a market capitalization-weighted index, deriving its value from the valuations and market capitalizations of the constituent companies. To determine the index level, the total free float market capitalization of the 35 companies is divided by the corresponding value from a reference period and subsequently multiplied by the index level associated with that base period.

• What companies are part of the IBEX 35?

  As of November 2023, the companies in the IBEX 35 are as follows:
  
  ACS (Construction), Acerinox (Steel), Aena (Aviation), Amadeus IT Group (Tourism), Acciona (Construction), Acciona Energía (Energy), BBVA (Financial Services), Bankinter (Financial Services), CaixaBank (Financial Services), Cellnex Telecom (Telecommunications), Inmobiliaria Colonial (Real Estate), Endesa (Energy), Enagás (Energy), Fluidra (Manufacturing), Ferrovial (Infrastructure), Grifols (Pharmaceuticals), International Airlines Group (Aviation), Iberdrola (Energy), Indra (Information Technology), Inditex (Textile), Logista (Logistics), Mapfre (Insurance), Meliá Hotels (Tourism), Merlin Properties (Real Estate), ArcelorMittal (Steel), Naturgy (Energy), Red Eléctrica (Energy), Repsol (Oil and Gas), Laboratorios Rovi (Pharmaceuticals), Banco Sabadell (Financial Services), Santander (Financial Services), Sacyr (Construction), Solaria (Solar Energy), Telefónica (Telecommunications), Unicaja (Financial Services).

• How can I trade the IBEX 35?

  You can participate in the IBEX 35 market through various financial instruments such as ETFs, Futures, or Contracts for Difference (CFDs). However, the availability of each option is subject to specific regulations and may not be accessible in certain countries. Alternatively, you have the option to invest directly in individual stocks of companies listed on the IBEX 35.

• What factors affect the IBEX 35's performance?

  Factors like geopolitics, monetary policy changes, economic releases, market sentiment, and even supply and demand can affect IBEX 35 prices.

• Is the IBEX 35 a good investment?

  The IBEX 35 can present an attractive investment opportunity for traders and investors aiming to capitalize on the liquidity of Spain's leading companies.

It's essential, however, for traders to remain vigilant, acknowledging that volatility can surface unexpectedly. It's crucial to be mindful of the inherent risks associated with trading in order to make informed investment decisions.

• What are the key sectors represented in the IBEX 35?

  The main IBEX 35 sectors include finance, consumer goods, energy, and telecommunications.

• Where can I find real-time data on the IBEX 35?

  You can find real-time data on the IBEX 35 on financial websites and the Bolsa de Madrid website.