The European Union may be plunged into crisis again with today’s developments in Italy. Following Brexit and the election of Trump in the US, the revolt against the establishment continues with Italians voting “no” in the referendum. The Italian Prime Minister Matteo Renzi has resigned following the heavy defeat in the referendum. From a BBC article:
Sleepless nights and uneasy prospects – BBC Europe editor Katya Adler in Rome
EU leaders won’t have slept much on Sunday night. Angst about Italy makes an uncomfortable bedfellow and there’s plenty for them to worry about. Particularly in Brussels. Prime Minister Renzi was the only premier left in Europe with a vision for the EU’s future. Angela Merkel is too busy crisis-managing while much of France is in thrall to Front National eurosceptics.
But Matteo Renzi is no more. The self-styled reformer with his promise to stabilise politics and kick-start the Italian economy has managed quite the reverse.
Italy wakes up on Monday to the threat of a banking crisis, political turmoil, and a group of anti-establishment populists banging on the doors of government. Eurozone beware and EU be warned. Italy is the euro currency’s third largest economy and it’s in for a bumpy ride. And there are more unpredictable votes to come in 2017: in France, Germany the Netherlands and perhaps here in Italy too.
The No vote was supported by populist parties, and the referendum was regarded as a barometer of anti-establishment sentiment in Europe.
The populist Five Star Movement says it is getting ready to govern Italy now that Mr Renzi is resigning. “Starting tomorrow we’ll be at work on a Five Star government,” one of its leaders, Luigi Di Maio, said.
The movement, led by comedian Beppe Grillo, spearheaded the winning No campaign.
Opposition leader Matteo Salvini, of the anti-immigrant Northern League, called the referendum a “victory of the people against the strong powers of three-quarters of the world”.
European equity markets and Italian equities in particular will be volatile over the next few days due to the outcome of the elections tonight. Value investors trying to pick up Italian stocks may want to wait a while until the dust settles.
It has been a few years since I wrote about the top companies in Italy. In this post, let’s take a quick look at the top 10 Italian firms by market capitalization:
|S.No,||Company||Industry||Market Cap (in Euros)||Dividend Yield (%)|
|1||Eni SpA||Oil & Gas Producers||52.52bn||5.91%|
|3||Intesa Sanpaolo SpA||Banks||38.00bn||6.57%|
|4||Luxottica Group SpA||Personal Goods||25.94bn||1.77%|
|5||Assicurazioni Generali SpA||Nonlife Insurance||20.49bn||5.85%|
|6||Tenaris SA||Industrial Metals||19.57bn||2.60%|
|7||Atlantia SpA||Industrial Transportation||18.51bn||4.38%|
|8||Telecom Italia SpA||Fixed Line Telecommunications||15.51bn||--|
|10||Snam SpA||Gas, Water & Multi-utilities||13.41bn||6.96%|
Source: FT Stock Screener
Eni SpA (E) , the oil and gas giant is the largest Italian public company based on market cap. The ADR trading on the NYSE currently has a dividend yield of over 6% and closed at $28.75 on Friday.The next top firm is the electric utility Enel SpA(ENLAY).
Intesa Sanpaolo SpA (ISNPY) and UniCredit SpA in the top list can be avoided at this time due to the crisis in the Italian banking sector. The oldest bank in the world, Banca Monte dei Paschi di Siena S.p.A.(BMDPY), may face collapse if a new government does not engineer a bailout.
Disclosure: No Positions