Investing in Italy

Investire | September 2020 

At the time of the lockdown, thousands of tricolor flags appeared on the balconies and roofs of Italian homes. Indeed, Italians are a notoriously resilient people and, in times of trouble, they join forces. Videos of the aerobatic demonstration team of the Italian Air Force known as Frecce Tricolori flying on the notes of the national anthem or Puccini’s aria Nessun dorma seem to have rekindled our patriotism. 

Since then, real economy and, in particular, Italian businesses have become matters of interest to Italians, certainly secondary to health concerns, but overriding issues relating to investments. 

To what extent will this surge of patriotism influence Italy’s investment decisions? Will investments in real economy gain ground in our country?

“Visioni per un mondo a tassi zero, dalla liquidità all’economia reale”, a research commissioned to FINER by ASSOGESTIONI, answers some questions. The study involved 1.600 end investors and 1.000 professionals in charge of investments (financial advisors, private bankers and bank managers) interviewed before and after the lockdown. 

In February 2020, before the beginning of the pandemic, 64% of end investors showed an interest in investing in Italian businesses; after the pandemic, the percentage grew substantially, reaching 77% in May 2020. 

In fact, such high percentage is the result of an ongoing trend underway from 2017, with the launch of PIRs (individual savings schemes). Their setback and recent relaunch did not lessen the propensity to invest Italian

There are two main reasons. The first reason – which is also the most evident one – is patriotism, however fleeting it may be; this is, so to speak, a driver running on AC power: strong in times of hardship and milder in times of peace. 

The second reason – subtler and, at the same time, more engaging – has to do with the need to know where and how money is spent in order to have a sense of proximity and control on it.

We could therefore expect a preference for investing, for example, in Ferrari shares rather than in Aston Martin shares, and not merely on the basis of differences in performance. 

Interestingly, professionals in charge of investments (that is, those who offer support to end investors in their investment decisions) agree in saying that the level of interest in investments in Italian businesses has increased (from 41% to 58% after the Covid-19 breakout). 

However, the numbers estimated by financial professionals are lower than those reported by their clients, suggesting higher skepticism perhaps inspired by the suspicion that their clients’ interest may have been sparked merely by the prospect of higher profits. 

In truth, all Italian end investors interviewed upheld their willingness to sacrifice a small part of their profit for the sake of investing in Italian businesses that may in turn offer more jobs. 

There is a chance that this surge of patriotism may turn into concrete actions. This will largely depend on the selection of Italian businesses set for healthy growth prospects and on the readiness of Italian companies to open up to third-party capital investments. 

Nicola Ronchetti 

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