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Index IDEA: Italian equity indexes decline in 2016 as Italy prepares for referendum vote

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.[1]

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.


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[1] 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.

© 2016 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, “FTSE TMX”) and (4) MTSNext Limited (“MTSNext”). All rights reserved.

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All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.

Views expressed by Stephane Degroote of FTSE Russell and Viktor Nossek of Wisdom Tree are as of November 30th and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the LSE Group.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE MIB Indexes or the fitness or suitability of the indexes for any particular purpose to which they might be put.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this IDEA should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group index data and the use of their data to create financial products require a licence from FTSE, Russell, FTSE TMX, MTSNext and/or their respective licensors.

Past performance is no guarantee of future results. Returns prior to November 17th for the FTSE MIB Banks 15% Capped Index are prior to index inception and represent historical hypothetical returns. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets.

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