"If the League wants to overthrow the government, let it be clear," replied the leader of the anti-establishment, Luigi Di Maio. This phrase from one of the heavyweights of the Italian executive has served so that the equity markets have picked up a scenario of new elections in one of the economic powers of the European Union. To the point that the media do not rule out that the fights end in a breakdown and, therefore, in calling early elections By the end of September. Something that small and medium investors in the old continent do not like.
Within this general context, the response of one of the parts of the government of Rome has not been long in coming. In this sense, it has been revealed that "no government is going to fall tomorrow," said Salvini, who announced that he is leaving quietly as is his tradition on vacation at the end of July with his son. But something else is what the media think since "the government has been on the brink of crisis on several occasions," recalls the newspaper La Stampa in an editorial entitled "Chronicle of a Death Foretold." In any case, it is a new scenario that investors will have to count on to plan your strategies after, or perhaps, during the summer.
The falls in the Ibex 35 were in Rome, where Italy's risk premium rose to 193 basis points and banking was one of the worst sectors in the equity trading floors. The Mib closed with falls of more than 2%, with collapses in the main transalpine banks: Banco Bpm with almost 6%, Ubi Banca with 4,5%, Unicredit with 3% and finally Intesa Sanpaolo with 2%. Meanwhile, in the debt market, the Spanish risk premium stands at 72 basis points, with the yield on the 10-year bond falling to 0,4%. Another sign of uncertainty for small and medium investors.
Italy: new instability in the stock markets
In any case, there is one thing for sure and that is that the Italian economy is under permanent observation, as recognized by Von der Leyen, the new head of the European Union, and every government is obliged to take unpopular measures. against the high public debt. In this context, this news can generate changes in strategy in the investment of users and precisely before they take their well-deserved summer vacation. Because in effect, it can produce effects on some products of the financial markets. As for example, in the purchase and sale of shares on the stock market.
If elections are held in this important country, there is no doubt that the profitability of certain savings models would be affected. It is one of the reasons why it is necessary to review what these products are and what should be done so as not to lose money in operations. And if these movements can be made profitable, much better for the interests of small and medium investors. Although they will be a section whose period of permanence will not be excessively high and will have its epicenter during the months of this summer. Where he will probably catch us on the beach or in any other vacation destination, rest after a year of work.
The most affected Spanish stock market
After the Italian, Spanish equities would be one of the most affected within the countries of the European Union, as happened this past Friday with the arrival of the news. Although there is no special value linked to these movements, it is the banking sector that would be hardest hit by this advance in the Italian elections. If so, it would be necessary undo positions in the domestic market and go to others not so influenced by this political fact. Take, for example, the German and French equity markets. In any case, it would be necessary to avoid exposing oneself to the positions of the banks, which are the worst performing banks from now on.
On the other hand, although the movements they can be very abrupt in the first days, in a few days the configuration in the prices of the stock market values will stabilize. For this reason, there will be no choice but to act very quickly if you do not want to be immersed in movements that can ruin your desired vacation. Beyond other series of technical considerations and perhaps also from the point of view of the fundamentals of some of the securities that are publicly traded. Although prudence should be the common denominator in all your actions.
Investment funds in fixed income
This is now the product most vulnerable to a change in the political landscape in Rome. Where the peripheral investment funds are the ones that undoubtedly can lose the most on this occasion. They are products that combine Italian debt and bonds with other financial assets of similar characteristics. And that when you come back from the holidays, they may give you the odd very negative surprise. As is the case of the depreciation of their securities that would be the most punished in the financial markets from these days.
While on the contrary, it cannot be forgotten that investment funds of these characteristics are very common in investment portfolios that small and medium investors have. with a more conservative or defensive profile. To the point that they can even be combined with financial assets from equities. It is necessary to carry out a special monitoring of these funds to avoid that they can be more punished from the account. And if necessary there would be no other solution to transfer them to other safer investment funds these days.
The most risky Italian bonds
This is another of the products that can be infected from this possible scenario in the EU nation. Therefore, you must refrain from carrying out any operation until the doubts about this political aspect are cleared up. There will be time to open positions in this class of bonds if circumstances require it. But in the meantime, you better take a look at other financial assets that offer you more security to conserve and make profitable savings. So that in this way, you can spend a few quiet days on this vacation, which is after all the goal you are pursuing this year. It is not worth risking money on bonds of these characteristics because you can leave many euros on the way.
In this sense, the solution to this monetary problem lies in opting for the German or American bonds. For the precise reason that they are, they provide greater security at this time. To the extent that they act as a safe haven to host investors' capital. As they have traditionally done in recent years at times of greatest instability in financial markets. This is an idea that can be very profitable to defend your interests in these difficult days for the world of money. Where you have to be very fast to make it profitable with some success.
Opt for the most defensive sectors
In any case, if your real intention is to operate in the purchase and sale of shares on the stock market, you have another investment strategy that is very simple to carry out from now on. It is about investing in the most defensive securities of the financial markets and that are less vulnerable to the most intense movements in the conformation of prices. In this sense, an excellent stock market proposal resides in the power companies, highways or food distribution chains. To the extent that they can do better than in the other business segments.
While on the other hand, another solution to this specific problem would start from an approach based on the collection of dividends. With a profitability that ranges from 3% to 8% and where you can find many securities of the aforementioned stock sectors. Through a fixed and guaranteed payment every year, whatever happens in the financial markets. Being a way of constituting a very special fixed income portfolio within the variable. But in case reducing the risks in a very striking way. Given what may happen in the Latin country in the coming months.
Either way, it is a scenario that you have to consider these days to adjust your investment portfolio and not lose money in open operations. Because in effect, you can take the odd negative surprise in these weeks that you should avoid at all costs with a specific strategy and limiting the risks above other considerations. Not surprisingly, the financial markets are very aware of what may happen in the Italian government from now on. Where the Spanish stock market would be one of the most affected.