CNBC. Avoid Spain, but Buy Spanish Regions. 06.02.2013
Spanish regions are often described as Prime Minister Mariano Rajoy‘s biggest headache: they’re highly indebted and decentralized. But RBS has found a sweet spot in Spain’s strongest regions: Madrid, Navarre, Castilla y Leon, as well as the Canaries and the Basque Country, with returns of 14 percent over the past three months since the bank initiated the trade.
The strongest regions operate under better conditions than Spain as a whole: they’re on track to meet their 1.5 percent deficit target for 2012-well below the country’s national target of 6.3 percent.
In land regions such as Castilla y Leon, Navarre and the Basque are less risky than coastal ones and benefit from an industry-orientated economy rather than construction and tourism. Navarre posted limited growth of 0.6 percent, compared to a 2.7 national contraction throughout the recession.
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