Indexes from FTSE Russell measuring the Italian equity market have declined significantly in 2016 as Italian voters prepare for the constitutional referendum to be held this Sunday, December 4. The FTSE MIB (Milano Italia Borsa) Index, which measures the performance of the 40 most liquid and capitalized stocks on the Borsa Italiana, has declined nearly 21% (in Euro-denominated terms) year-to-date as of November 30. And the FTSE MIB Banks 15% Capped Index, which was launched on November 17 and measures the performance of the Italian banking sector, has fallen nearly 56% for the same period based on historical pre-index inception performance data.
Many experts have predicted potential risks to the Italian equity market, in particular the Italian banking sector, as voters will decide whether or not to make changes to the Italian constitution which, if enacted, could lead to a substantial economic reform package led by Italian prime minister Matteo Renzi. The Italian referendum vote is occurring in a year of other notable political results, namely the UK’s “Brexit” vote in June and the election of Donald Trump as US president in November.
Stephane Degroote, Head of ETFs & Derivatives, EMEA, FTSE Russell:
“The FTSE MIB Banks 15% Capped Index is designed to be used as a tool for market participants who wish to measure the performance of Italian banking sector stocks or as the basis for investable products designed to seek comprehensive exposure to Italian banks. The 15% cap on individual constituents is designed to help diversify the index and offset the outsize influence of any single constituent.”
Viktor Nossek, Director of Research, WisdomTree:
“We believe banks are an important part of the equity landscape in many European markets, especially in Italy where they remain the largest sector. The forthcoming referendum, while not directly focused on the banking sector, is likely to be considered as part of the decision making process of investors considering allocating to this sector.”
WisdomTree introduced the Boost FTSE MIB Banks ETP (ITBL), based on the FTSE MIB Banks 15% Capped Index, on November 28. For a deeper dive into the FTSE Italia Index Series, go to the FTSE Russell website.
 Source: FTSE Russell. Data is as of November 30, 2016 and represents hypothetical returns. Past performance is no guarantee of future results. Please see the end for important legal disclosures.
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