Italian equities are stumbling amid political upheaval by populists

by 23 May, 2018

An Italian flag flies in Rome. Credit: Dmitry Dzhus

Investors in Italian stocks who have been craving market stability after the political upheaval in Rome during the last 2 weeks are sure to be disappointed further, now that the man who was pipped to become Prime Minister has had his credentials brought into question, prompting yet more volatility.

Giuseppe Conte was nominated as a candidate to be Prime Minister by the leaders of Italy’s key populist parties, the League and the 5-Star Movement, headed by Matteo Salvini and Luigi Di Maio, who won stunning victories in the recent Italian elections. 

However today Conte’s background is being heavily scrutinised, as he faces accusations he lied on his CV about his academic qualifications. The suspicions of foul play by Conte have put another spanner in the works of efforts to form a government in Rome. As a professor who teaches law in Florence and Rome, Conte is an unknown entity in Italian political circles, which was another reason why his nomination has been met with skepticism.

More broadly, fears from investors about what a populist government could mean for the Italian economy have kept Italian stock indices under heavy pressure.

The Cboe Italy 40 index fell 5.14% for the week early Wednesday (see below), representing a significant dip. However, the index could recover some lost ground when a Prime Minister is finally decided upon, so investors looking to trade the political saga should keep an eye on the story!

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