Italy’s benchmark FTSE MIB index climbed to its highest level in almost 15 years, as investors continue to be attracted to the market by its low stock valuations. Similar gauges in Germany, France and the UK all hit records earlier this year.
(Bloomberg) — Italy’s benchmark FTSE MIB index climbed to its highest level in almost 15 years, as investors continue to be attracted to the market by its low stock valuations. Similar gauges in Germany, France and the UK all hit records earlier this year.
The index climbed 1.1% on June 30, reaching its highest level since September 2008, during the global financial crisis, and taking its gain for this year to 19%. It’s the best performer among major European peers.
“The last 18 months saw several tailwinds for Italian stock market and economy,” said Angelo Meda, head of equities at Banor Sim. “Higher interest rates and oil prices helped financials and energy stocks, a strong dollar and the recovery plans after Covid gave a boost to Italian GDP and the new government didn’t fight against European institutions.”
The FTSE MIB’s valuation ratio based on forward earnings is 8.3 times, ranking as one of the cheapest in Europe even after gains of about 39% since a rally started in late September. That suggests there’s room to rise further.
The last time the FTSE MIB index touched the 2008 levels was in January 2022. It posted the best half-yearly performance since 2013, but is still trading about 36% below a peak it reached in 2007.
The stock-market gains have come as Italy’s inflation rate dropped to a 14-month low in June. Consumer prices rose 6.7% from a year earlier, considerably lower than May’s increase of 8%, with slowing utility price gains and cheaper transport costs helping to push the overall pace down.
Banks Gain
UniCredit SpA, which was added to the Euro Stoxx 50 in February, is the top performer among Italian bluechips in the past 12 months, having more than doubled in value over that period. In May, the lender raised its full-year profit target and said it will boost shareholder payouts, after a surge in lending revenue helped the bank post its best-ever first-quarter results.
Other top contributors to gains on the FTSE MIB in the past 12 months include luxury sports car maker Ferrari NV, which posted first-quarter earnings that beat expectations, Moncler SpA, BPER Banca SpA, Iveco Group NV and Banco BPM SpA.
Italian banks are up about 26% this year, with financial stocks having the largest weighting on the main benchmark, at about 33%. Yet, they are trading at half the levels seen in the immediate aftermath of the great financial crisis.
Elsewhere in Europe, other markets have also shown resilience. In May, Germany’s DAX Index closed at a record high, following similar milestones reached by France’s CAC 40 and UK’s FTSE 100 earlier this year. Still, some investors remain cautious on Italy.
“The rebound from the lows in late September has been huge,” Fabio Caldato, a partner at Olympia Wealth Management, said. “We remain generally positive, but the up-trend is, in our opinion, mostly done.”
–With assistance from Sonia Sirletti and Michael Msika.
(Updates with closing level.)
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