Italian General Election

The forthcoming Italian General Election makes for a difficult situation in regards to investments in general but also, in particular, Italian equities.  The recent super cycle in major European Elections from 2015 – 2016 had the potential to completely change the landscape of European politics as the populist vote came to fruition.

By and large though, despite some initial trepidation, the populist vote was rejected and the centre or centre-left governments of the various European nations prevailed. In my view, this was important for the unity of the Euro as a whole, but also gave the pact the stability from ruling incumbent governments. Certainly, from a financial investment perspective, this was well received. To confirm this, in 2017, the FTSEMIB produced a very healthy return of 18.5%, whilst the DAX returned just over 14%.

However, since then, various conflicts across the Middle East and slightly closer to Italy’s border in the shape of Libya have raised political tensions. Indeed, the ruling government in Italy, known as PD, is alleged to be one of the most unpopular Italian governments in recent history.  Due to polling restrictions in Italy, it’s difficult to ascertain or determine how true the predictions are, but currently, it’s possible the most popular government is the anti-establishment, 5stelle movement. Importantly though, they don’t have the support for a single ruling government. This means that we have the potential for a hung result: arguably the worst case scenario for financial markets.

In my opinion, the prospect of an anti-establishment party brings the potential for Euro negative sentiment and could certainly push the EURUSD below 1.20 in the short-term. In addition, Italian equities are likely to feel the pressure from the dual result of a change from centre-left government and a potential overall hung result. My advice would be caveat emptor.

Jordan Hiscott,

Chief Trader


The above-mentioned market views and content reflect only the opinion of the author, not that of ayondo. This service is for informational purposes only and does not constitute advice or investment advice.


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