The crowded European electoral schedule (general elections in March in the Netherlands and in Italy by May next year, general and presidential elections in April-May in France, and a German federal election in September), and the possibility of unexpected political outcomes, could lead to sharp policy shifts in eurozone member states with implications for sovereign ratings.
Despite generally positive expectations of growth in 2017, La Française should bear in mind certain factors that indicate uncertainty: President Trump's protectionist tendencies and the potential difficulties to realize his proposed program, the European elections, and the consequences of Brexit.
Year to date, the main Italian index, FTSEMIB, is down more than 20% (Price return, €) and has underperformed the broader European market by c22%. This has been driven by concerns surrounding the high levels of Italian gross non-performing loans (NPLs) in the banking system and the pending Italian Referendum
“A Quantitative Easing (QE) programme, as decided by a central bank, is a plan that consists of buying large quantities of assets whatever the price is. As a consequence, prices lose their precious information content that normally enables investors to switch meaningfully between different asset classes”, says Yves Longchamp, Head of Research di ETHENEA Independent Investors (Schweiz) AG.