Italian Shares Tumble over Inconclusive Election Results

The voters of Italy are definitely tired of austerity as it is reflected clearly after the elections. The results are pretty inconclusive till date and as a result, the Italian stocks have declined the most within last 10 months. The benchmark gauge FTSE MIB Index went down by 4.9% and is currently at 15552.2. This is the biggest decline for the gauge since 10th April, 2012. Overall, in 2013, the gauge has tumbled by 3.4% and today’s share trading volume was 41% higher than that of the average of last 30 days.

According to Christian Zogg, the Departmental Head of Equity and Fixed Income of LLB Asset Management AG, investors are now a bit dismayed as Mario Monti has fared so poorly in the elections securing only 10% of the total votes. Christian added that investors are now under fear that Italy will discard the recent reforms made and hence, in the mid-term, this makes a good buying opportunity for the equities.

The favorite according to pre-election polls, Pier Luigi Bersani has won the lower house of Italian Parliament by half a point. On the other hand, the former Prime Minister of the country, Silvio Berlusconi, won a blocking minority in the Senate. Beppe Grillo’s Five Star Movement, which made its first ever national contest, received 25% of the votes for the Chamber of Deputies. Incidentally, to form the Government, it is mandatory to obtain majority in both the houses.

Berlusconi incidentally has congratulated Bersani on his victory in the lower house and stated that he is ready to a broad alliance so that a re-election can be avoided. He added that each of the political leaders should now think logically and do what’s the best for the country’s future.

The biggest banks of Italy, Intesa Sanpaolo and UniCredit SpA, both declined by around 8.5% on today. The largest insurer of Italy, Assicurazioni Generali SpA, tumbled by 6.5%, whereas, the biggest phone company of Italy, Telecom Italia SpA went down to its 15-month low figure, that of 54.9 Euro cents per share.

Italian Government bonds went down and yields jumped up to 4.89%. The FTSE All Share Bank Index declined by 8.4%, its biggest since August. Generali also went down by 84 cents and is at 12.01 Euros. Banca Popolare di Milano Scarl, on the other hand, experienced a fall of 5.7%.