An article in the City of London media, the Financial Times, widely reported in Italy over the last 24 hours, confirms the intuitions of many Italian commentators: alternative management funds have pledged to test the third largest economy in the euro zone, in order, of course, to take advantage of it.
Their downside bets on Italian debt have never been higher since the Great Financial Crisis of 2008. According to data from S&P Global, the total value of Italian bonds lent by these investors for this purpose now exceeds €39 billion.
The justifications put forward do not come from the most sophisticated analyzes of the new electoral panorama that is shaping up for the legislative elections on September 25. In the British economic daily, an anonymous “big” hedge fund investor judges that “Italy seems the most vulnerable country”, which would explain why it is now “widespread” to play with the divergence between German and Italian interest rates.
Short sale
Mark Dowdey, director in London of Blue Bay Asset Management, a subsidiary of the Canadian bank RBC, openly exposes his reasoning: we are facing the country most exposed to the rise in gas prices and, therefore, “politics is there hard”. The way, there too, to draw the conclusions of an institutional upheaval in Rome before it happens. The investor then declares ten-year securities for short sale, using futures contracts.
Reporting on the article announcing such financial clouds, the Italian public information channel RAI News can only establish the observation of a widening of the gap with the German reference rate, and the concern in this regard of Italian savers, among the which are necessarily many of those voters who intend to overturn the political table in a month.
According to its headline, the Milanese newspaper Corriere della Sera, traditionally close to industrial circles, has no more illusions: “The biggest speculative campaign against the country’s debt is underway.” An intermediary of the Italian market, Pietro Cali (Copernico SIM) believes that “the specter of 2008 is very present in the minds of investors” and that the resignation of Prime Minister Mario Draghi last month brought to light “a strong attraction for short strategies” in Italy, as “hedge funds are always ready to exploit investor fears”.
Arm wrestling with the ECB
Does the Italian debt stagnation then become inevitable, as the anti-EU right wing would come to power? The thesis of a collapse before the announcement of the results of the elections on September 25, not everyone believes yet. Also in the Financial Times, Decio Nascimento, chief investment officer of the American alternative fund Norbury Partners, warns those who think they can win a “deadlock” against the European Central Bank (ECB), which in July installed a new intervention intended, potentially, to avoid a fragmentation of interest rates on loans in the euro zone.
And that is exactly what Augusto Minzolini, who runs Il Giornale, a pro-right-wing newspaper clearly leading in the polls, thinks. “We are not like in 2008”, because “this time”, he assured confidently, “there is the ECB’s shield”, except that obviously this argument of the Frankfurt threat does not convince the hedge funds again.
thatcher legacy
Brothers of Italy (FdI), the so-called “post-fascist” formation, also takes advantage of all the risk that this distrust in the market entails and, consequently, has launched an attempt at normalization with these same international arbitrageurs. FdI Director Giorgia Meloni remains by far the best placed in terms of voting intentions to succeed President Draghi. She addressed these dubious markets yesterday through the British agency Reuters: “We don’t want to destroy Europe. We don’t want to do crazy things.” This deputy, who has forged the image of a single figure in the national opposition, reaffirms that her government “would not endanger public finances.”
Recently in an interview with the conservative London magazine The Spectator, in this campaign exercise, Giorgia Meloni even claimed the legacy of Margaret Thatcher, the most prominent figure of contemporary liberalism. From this point of view, she still has a long way to go to gain support, even within her own political alliance. Il Foglio, a conservative Milanese daily, a lifelong supporter of former Prime Minister Silvio Berlusconi, writes that despite “the image that Giorgia Meloni tries to project abroad, the reality is that her program has a strong protectionist, statist and hostile to the market”. . Much more Lepenian than Thatcherian.” The aggiornamento has not yet been successful.
Source: BFM TV
