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Bet On Italy's Political Deadlock With These 4 Stocks

May 02, 2018 9:30 AM ETIPGLF, NTZ, PRDSY6 Comments
Gio Danisi profile picture
Gio Danisi


  • As I had anticipated, the Italian elections held on March 4th failed to result in a clear winner or in a parliament majority.
  • At this point, even new elections would hardly change this state of affairs.
  • The Italian economy will benefit from the current stalemate, as I previously explained.
  • Accordingly, Italy could become a good optionfor patient investors within the next 3-4 years.
  • I have selected four Italian companies with anexcellent risk/reward potential to wisely bet on Italy.

In my previous article about Italy, it didn’t take a crystal ball to predict what would have happened.

It’s highly unlikely that a government led by only one (or two) political faction will be formed, due to the combination of political fragmentation and ineffective electoral law.

At this point, the different political parties could even decide to continue with Paolo Gentiloni’s temporary government, in order to avoid a quick drop in approval ratings if the social and economic conditions worsen.

Instead, early elections are very unlikely to happen, despite being constantly proposed by the various political leaders, because the Italian President Sergio Mattarella is clearly against them. Moreover, due to the current electoral law, new elections will almost certainly result in the same situation we are facing now.

Italy will probably benefit from a minority government

As I already explained in my previous article, a scenario like the current one will probably turn into the best opportunity for Italy at the moment.

If we had a clear political majority, it would support a government inclined to boost its approval ratings by promoting popular deficit spending measures and fueling a useless controversy with the European partners.

Since the day after the vote, the Italian stock index has performed better than the S&P 500 (NYSEARCA: SPY):

Source: Yahoo Finance

This trend is deemed to continue at least until there is a government with a clear political majority.

Patent Box

During the second half of the year 2015, Italy introduced a new tax break for firms that make a profit from certain intangible assets, like trademarks and patents, software, design, know-how, etc.

We are talking about a considerable tax relief that will consistently increase the profit margins of eligible Italian companies. It starts with a 30% tax benefit for the 2015 fiscal year up to

This article was written by

Gio Danisi profile picture
Private “part time” value investor. I've been managing my personal funds since May 2008.As stocks are just pieces of businesses I try to look at mine with an enterpreneurial approach: that's why my portfolio is made-up by 6-8 holdings, which I follow costantly. My holding period is ideally "forever", even though I can't exclude to make some changes from time to time.

Analyst’s Disclosure: I am/we are long NTZ, IPGLF, PRDSY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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