The results of the European Parliament elections held on May 26 may lead to a new dispute between Italy and Brussels that may have some repercussion on the equity markets of the old continent. Not in vain, according to information published by the news agency Bloomberg, the European Union may be considering the option of open a new disciplinary process against Italy for not respecting community regulations on budgets. Although the greatest effect would be on the equities of the transalpine country.
Where one of the most relevant features is that the risk premiums remain at similar levels than in other months of the year. Except in the case of the Italian that has risen around 6% to position itself very close to 300 basis points. While on the contrary, the Spanish risk premium has risen to levels very close to 100 basis points. From this point of view, this is a factor that is not having a very important effect at the moment. With little impact among small and medium investors. Beyond other considerations of a technical nature and perhaps also from the point of view of its fundamentals.
While on the other hand, another of the most relevant aspects that the confrontation between Italy and Brussels may provoke is the worsening of the transalpine public debt. In this sense, there will be no choice but to be more cautious in hiring this financial product. Especially through investment funds of these characteristics. As long as this scenario is maintained, it will be completely abstain from contracting these products intended for investment since they will certainly not be profitable at all.
Italy: check your risk premium
One of the economic parameters that will surely have to be watched is the country's risk premium. To verify yes the best moment or not to enter their fixed income markets. But also as a warning to how its main values can do it in the stock market. It will be a strategy in which it will give more than one signal about what you should do at all times in the different financial markets. With a utility that is beyond any doubt and that can even help you improve your profitability in the financial markets.
While on the other hand, it can give you the exit guidelines before the moments of greatest instability due to the parameters that indicate the real state of the economy from one of the most powerful countries in the European Union. Without at any time you have to make any effort to achieve your highest priority objectives in the financial markets, both in fixed and variable income. Because do not doubt at any time that there is a lot of money at stake. Especially if the confrontation between Italy and Brussels intensifies. Something that can happen perfectly in the next few days or weeks.
Review the selective index of the stock market
Another task that you will have to promote from now on is to monitor the selective index of Italian equities more closely. Faced with a scenario that may have a worst behavior than in the rest of the countries in its community environment. From this general scenario, a very effective measure will consist of verifying the comparison of the Italian index with that of the rest of the old continent. So that in this way, you can choose the most profitable bag at all times. Depending on each scenario that may occur in each conjunctural scenario that emerge at any time.
While on the other hand, we cannot forget that equities are now trading at a significant discount compared to other equities markets on the continent. From this point of view, there is no doubt that the upside potential that it has is much higher than in the other squares. Although you have to know when to open positions in stock values and also choose exit levels. Always with very adjusted prices, in one way or another. So that in this way, you are in a better position to make the savings profitable from now on.
Attentive to the evolution of the markets
During the past year, Italian equities have been one of the places that lagged behind due to purely political factors, which have led to a high risk premium up to 300 basis points. Beyond another series of technical considerations and also from the point of view of its fundamentals. Something that we must not forget if we want there to be no errors in the investment strategies that we are going to apply from now on. Because what it is about is to ensure that our personal or family capital continues to expand year after year. Which is, after all, our highest priority.
Another aspect that will have to be very attentive in these coming days is that with the accounts that Italy presents in the European Union. Where one of the factors that will be looked at with a magnifying glass is whether increase debt and therefore it may be denied by the competent community bodies. This is another factor that may affect the Italian stock market in the second part of this current year. And therefore, any incidence in this aspect can lead to one or another trend prevailing among investors.
On the other hand, it must be emphasized that the European Commission could impose a fine of 3.000 million euros on Italy for violating the rules of the European Union due to the increase in its debt and its structural deficit, according to the country's Deputy Prime Minister. , Matteo Salvini. In this way, the Italian FTSE Mib has fallen close to 1%, below the other European indices. In a context that can generate some other problem for the equity markets from now on.