The Fear of Catalonia
Independence
Spain
is the fourth largest economy in Eurozone and fifth largest country in European
Union. The average GDP for the country amounts USD1.2 trillion while among the
17 autonomous communities, Catalonia contributes about 20 percent of the
country’s growth.
In
Catalonia, this community (otherwise known as state or province in other
countries) comprises 7.5 million population compared to an estimated 46 million
on countrywide record. This community region spans on Northeast region of Spain
with coastal line beach resorts on Coasta Brava and the highly appreciated
Barcelona as the capital city likened by many tourists.
It
would take no wisdom to comprehend that the Catalan Government is one of the
most efficient and richest entity while compared to the other 16 communities. In
term of economic growth, Catalonia pays the most taxes to central Government of
Spain. This has become the spark of division in the autonomous community to fight
for independence.
On
9 October, the Catalan Government ran a referendum to become independent amid
strong objection by central Government. Sources concluded that 90 percent votes
have favoured for it despite no official result has yet been announced. Euro
currency and stock markets in European region poised for panic button in case
of undermining danger of the national split.
The
Spanish central Government declares for the referendum to be clearly illegal.
Central leaders have warned of 2 possible actions that could be applicable if
Catalan Government announces independence. First, the enactment of article 155
could remove the autonomy status of Catalonia and render all policies of the
community Government to be invalid. Second, the implement of martial law or
state of emergency in Catalonia. By doing so, there may be bloodshed through
military violence that will take some leaders into detention.
On
a larger scale of observation, European Union (EU) leaders have been worried of
the Spain’s rout because the unwelcome independence of Catalonia could lead to
the next exit of EU bloc. After U.K. voted to exit from the EU bloc, this
hairline crack could lead to a huge irreparable division among European Nations
if the unity is jeopardised.
Following
the dormant behaviour of Catalonia, European stock began to climb while Euro
currency has been stabilising. American
and European stock indexes have been edging higher while the global watchers
are waiting for U.S. FED to unfold the trimming exercise this month. Meanwhile,
Iraq central Government has sent troops to Kirkuk that is oil-rich and wants to
declare independence, causing oil prices to escalate. More excitement in market
will be revealed towards end of this month. Stay alert.
~
Dar Wong is a registered Fund Manager with 28 years of investment and trading
experience. The expressions are solely his own. He can be reached at dar@dektosinvest.com
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