Spanish stock ETFs have seen some small outflows following the controversial independence referendum in Catalonia, but the impact has been muted despite the shocking violence that ensued in the Spanish region and the number of headlines that have grabbed the news over the weekend.
According to reports, armed Spanish police injured hundreds of Catalans while trying to stop the referendum from taking place, taking measures such as firing rubber bullets, storming into polling stations and pulling women away from their ballot papers by their hair.
The next day, the euro reacted by falling 0.4% against the US dollar, but the market reaction remained relatively muted, with the the Spanish Ibex 35 index trading only around 1.3% lower than its level on the Saturday prior to the referendum, at 10,242.
Meanwhile, the outflows from Spanish Stock ETFs amounted to just €40.92m over the previous Friday and Monday 2 October, according to TrackInsight, as investors appeared to shrug off the news.
According to reports, despite the attempts of the police to stop the vote, some 2.3 million of the 5.4 million eligible to vote in the region managed to fill in their ballot papers, with the results revealing some 90% were in favour of independence.
Today (Tuesday 4 October) Catalans are striking against the violence displayed by the government towards this minority region, with public transport, schools and clinics closed for the day.
Although Catalan leader Carles Puigdemont has called for mediation with the Spanish government over the vote, he maintains that the Catalan people have earned a right to independence. Meanwhile, Madrid has vowed to do everything in its power to stop the independence declaration.
Whatever the outcome, the recent events are the culmination of centuries of distrust between the separatist region and the rest of the country and have only served to deepen this division.
Wider Europe reaction
The wider EuroStoxx 50 index has also remained unaffected, posting a steady rise and trading at 3,602 by Tuesday morning (3 October).
Flows into European Stock ETFs slowed to just €2.13m on Monday 2 October, but no outflows were detected and the cumulative flows into European equity products remain positive over the month at around €3bn.
Commenting on recent events, Tristan Perrier, economist at Amundi, said: “OK, so the Catalan situation and Germany’s election result reminds us we are not done with European political risk. That said, the market-calming outcome of the French election means there is lower political risk now than at the start of 2017. Recent events have not caused us to change our positive outlook on Europe.
“Europe’s recovery and economic solidity is unaffected, and remains on track. We do not see the events of recent days changing that.”