The asset manager Invesco expects the Ibex 35 to maintain its growth momentum in the second half of 2026, driven by banking and utilities. It reduces exposure to Taiwan and South Korea due to high valuations.
Invesco presented its outlook for the second half of 2026 this Wednesday in Madrid, showing clear optimism towards the Spanish Stock Market. The international manager believes that the Ibex 35 still has room for growth, supported by two pillars: the banking sector and energy companies. According to Fernando Fernández-Bravo, head of active distribution in Iberia at Invesco, "Spain is growing above the European average," a differential he largely attributes to the push from utilities.
Banking and energy, the engines of the Ibex
The Spanish financial sector is experiencing a sweet moment. Interest rates in the eurozone stand at 2.25%, a level that Invesco considers favourable for the profitability of entities. Fernández-Bravo has pointed out that "it is a good time to invest in banking," especially due to the international exposure of large Spanish banks, which diversifies their income sources beyond the domestic market.
On the energy side, Spanish utilities benefit from 'Next Generation' funds and the push for electrification. "They are helping utilities towards that shift in electrification for electric cars, data centres, or decarbonisation," explained the executive. Furthermore, the crisis in the Strait of Hormuz has highlighted the need to diversify energy sources, which plays in favour of Spanish electricity companies, which are more geographically diversified.
Invesco also highlights that the Spanish Stock Market has shown a positive reaction capacity to geopolitical news, reinforcing its appeal to international investors. The manager expects this dynamism to continue in the coming months.
Emerging markets: selective bet away from Taiwan and Korea
In its global strategy, Invesco focuses its attention on emerging markets, which it sees as the main beneficiaries of a weaker dollar. "The American Stock Market has performed very well, mainly due to artificial intelligence, but we believe that other geographical areas can perform just as well," stated Fernández-Bravo. The firm justifies this view by suggesting that investors could reduce their overweight in the United States and that the "Trump effect" diminishes the attractiveness of American bonds as a safe haven asset.
However, within the emerging markets, Invesco has begun to reduce its exposure to South Korea and Taiwan, two markets that have surged thanks to semiconductors and artificial intelligence. "We have started to reduce a bit because exports are doubling and tripling their levels from previous years. We believe that this is not sustainable in the short term," detailed the manager. Instead, the firm is expanding positions in semiconductors — due to expected orders for the next two years — infrastructure for data centres, commodities like copper and rare earths, and energy.
Regarding artificial intelligence, Invesco prefers to wait to see how it is actually monetised before increasing its exposure to the sector. For this reason, they are "a bit more negative" on software, while maintaining a positive outlook on sectors that supply the necessary infrastructure for its development.
Risks: oil at $150 or AI that does not monetise
The manager contemplates two major risk scenarios for the markets. The first is an escalation of the conflict in the Strait of Hormuz that drives oil prices up to $150 per barrel. In that case, fixed income and European, emerging, and Japanese equities would suffer declines, while the American Stock Market would perform better thanks to a strengthened dollar.
The second risk is that artificial intelligence fails to monetise as expected. This would lead to a decline of the Magnificent Seven on Wall Street, an additional weakening of the dollar, and a relatively better performance of European, emerging, and Japanese equities compared to American ones. Macarena Velasco, senior director of ETFs for Iberia & Latam at Invesco, has pointed out that "the market is very strong" and that once the situation in Hormuz normalises, central banks could resume interest rate cuts towards the end of 2026 or early 2027.
Invesco estimates a gradual opening of the Strait of Hormuz in the third quarter and a normalisation towards the end of the year. If this scenario materialises, contained demand would drive an economic re-acceleration. "We see no reasons for central banks to need to raise rates," Velasco added, with the exception of Japan, where they do justify a monetary tightening.
For investors interested in the Spanish Stock Market, Invesco's recommendation is to maintain positions in banking and energy, two sectors they consider undervalued and with clear mid-term catalysts. The manager also suggests keeping an eye on the evolution of the dollar and the opening of the Strait of Hormuz, factors that will shape the direction of the markets in the coming months.
You may also like
