Forget the S&P 500 index (SPX), Italy’s FTSE MIB is rocking

Global equities had a strong performance in 2023 as hopes of central banks and as earnings growth returned. American equities were among the best performers as the tech-heavy Nasdaq 100 index surged by over 50%. The S&P 500 index (SPX) rose by over 25%.

The FTSE MIB index, which tracks the biggest Italian companies, had a stronger performance in the past 12 months. It has risen by over 26% in this period while the S&P 500 index is up by less than 24%. It is also sitting at its highest level on record.

FTSE MIB vs S&P 500 index

Most importantly, the FTSE MIB index surge has been broad-based compared to the S&P 500. In the US, the SPX index surge was mostly because of the so-called Magnificent 7, which includes companies like Nvidia, Tesla, Microsoft, and Meta Platforms. The S&P 493, commonly known as the Mediocre 493, rose by less than 10%.

S&P 7 vs S&P 493 index performance

The FTSE MIB index, on the other hand, was more broad-based as most stocks were in the green. Of the 40 companies that make the index, only 9 companies were in the red. Leonardo share price more than doubled as demand for its solutions rose. 

For starters, Leonardo is one of the biggest aerospace and defense contractors in Italy and the 17th biggest company in the country. Like other companies in the sector like BAE Systems, it has benefited from the rising geopolitical risks.

The other top performers in the FTSE MIB index were Unicredit, Bper Banca, BCA MPS, A2A, Banco Bpm, Ferrari, and Stellantis. All these companies jumped by more than 40% in the past 12 months. As I wrote a while ago, Unicredit has become the best-performing European bank.

On the other hand, the top laggards in the FTSE MIB index were Diasorin, FinecoBank, Nexi, Italgas, and Interpump. Diasorin is one of the biggest Italian biotech companies that did well during the Covid-19 pandemic. 

Italian stocks have jumped sharply, helped by the relative stability during Giorgia Meloni’s government. While equities plunged in August after the government introduced a bank tax, they have rebounded after it brought in an alternative. The government is now considering a new bill known as DDL Capitali, which is expected to boost the local market.

The index has also done well as investors continue hoping that the European Central Bank (ECB) will start cutting interest rates soon. Most importantly, the index is quite cheaper than the S&P 500 index. It has a PE multiple of less than 9 compared to S&P 500’s 25.