It represents the third-largest economy in the Eurozone, as well as a cultural and historical relic the world over. Italy held its parliamentary elections yesterday, and the results were quite messy: none of the four main political parties running managed to achieve a clear majority, and their perspectives run a very wide spectrum - from pro-environment populist to far-right nationalist.
Italy's economic problems are quite apparent: 11% unemployment with sub-1% GDP growth, and debt accounting for 132% of its $1.85 trillion economy, and this has led to the discontent of the established Democratic party and its Prime Minister Matteo Renzi, who stepped down following the election results that showed his party only received 19% of the vote. It is now left to the hung parliament to somehow appoint a new PM.
The highest vote count went to anti-establishment populist party 5 Star (often referred to as M5S), which was founded by an Italian comedian named Beppe Grillo and is headed by 31-year-old Luigi Di Maio, with 32.2%. But reportedly, a bloc has formed between the 13.9% of former Prime Minister Silvio Berlusconi's Forza Italia party and the far-right (anti-euro, illegal immigration and same-sex marriage) Lega Nord party's 17.7%, demonstrating clear polarization between the Left and Right in the country.
This represents a big split between the Italian voting body, with a vastly diminishing centrist (Democratica) party bridging the gap. Berlusconi's re-emergence following sex scandals from years past will be very interesting to trace going forward, as Forza is also closer to the centrist spectrum, and may absorb sentiment from Renzi's decline. Should his political talents prove strong enough, Italy may see itself tacking further rightward than at any time since World War II.
Important ETFs to keep our eye on include iShares MSCI Italy ETF EWI and iShares Currency Hedged MSCI Italy HEWI . Fiat Chrysler FCAU , the Italian-American auto maker, currently has a Zacks Rank #2 (Buy) and a Zacks Style Score (Value-Growth-Momentum) of A.
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