The resignation of prime minister Giuseppe Conte on Tuesday marks the end of Italy’s 61st government since the end of the Second World War, a mere 74 years.
Populist politician, and deputy prime minister, Matteo Salvini is pushing for fresh elections, maybe as early as October, but this is far from certain given a fresh poll would likely be detrimental for other political parties, which lag his League party in the polls but are more numerous in Italy’s parliament.
Italian governments have often been formed of unstable coalitions and technocratic rule. Only one Italian prime minister in the last three decades, media mogul Silvio Belursconi, has served a full five year term.
Despite the country's fractious politics, some of its companies continue to be attractive investments for equity buyers, be they its luxury fashion houses or some of its bespoke export-led manufacturing businesses.
Ferrari, Italy’s iconic luxury auto manufacturer, for example has generated a return of roughly 245% for shareholders in the past five years. Shareholders in recent IPOs have also seen gains.
Investors in Nexi, the Italian payments company, have experienced a 10% return since its IPO in April. Buyers who bought shares in the 2018 IPO of Carel, the refrigeration unit manufacturer, are up around 48% on their initial investment.
Investors looking at Italian risk over the autumn months — particularly the expected IPO of yacht manufacturer Ferretti — should remember this. Unstable politics, while sometimes bad for short-term volatility, has not diminished good Italian companies' ability to boost investor returns.
Even Italy’s troubled banking sector has experienced a remarkable turnaround. Bad loan volumes have tumbled and capital ratios have improved.
If a company presents a solid fundamental investment case then the fact it is Italian should not prevent a fund from buying it, even if the country is in the throes of yet another political panic.
Investors are justified perhaps in asking for greater concessions from sellers, particularly in IPOs where early volatility in trading can be pronounced, but they certainly should not avoid investing in companies just because of Salvini's provocations.
If Ferretti was a good buy last month, it still will be in October, even if the political scene in Rome is as chaotic as ever.