U.S. Markets

Two-thirds of Italy systemic risk already priced in, says Natixis

MILAN (Reuters) - An analysis of the euro debt crisis of 2011-2012 indicates around two-thirds of Italy’s systemic risk has already been priced in, Natixis said on Thursday, adding it was now cautiously optimistic on the outlook for the country’s markets.

“We are at once optimistic and cautious,” analysts at the French investment bank told clients in a note titled “Italy: it’s only the beginning, but not the end of the world.”

“The market has, based on our political discount indicator, priced in around two-thirds, in reference to the 2011-12 sovereign debt crisis, of the systemic risk for Italy.”

They predicted that while markets would be volatile, the incoming coalition would be able to implement only a “scaled-back version” of its spending and borrowing plans.

Natixis now estimates a maximum downside for Italian equities at around 6 percent and added: “This would send a strong signal to buy Italian equities.”

Reporting by Danilo Masoni; editing by Sujata Rao