Italy ETF Swings Lower on Berlusconi, Election

February 25th at 12:52pm by John Spence

The iShares MSCI Italy (NYSEArca: EWI) staged a dramatic reversal to the downside in U.S. trading Monday as investors were glued to the latest headlines coming out of the country’s parliamentary elections.

“Projections from an early vote count in Italy’s election on Monday showed Silvio Berlusconi’s center right slightly ahead in the Senate, a result that could cause deep government instability if confirmed,” Reuters reported.

Monday’s sell-off exacerbated what has been a difficult February for the Italy ETF. The fund was down more than 10% for the trailing month heading into Monday’s violent about-face.

“With Democratic Party leader Pier Luigi Bersani’s center-left alliance reportedly leading in the lower house, a split could lead to a new round of elections or a potentially unwieldy coalition government,” MarketWatch reported Monday.

“Such a scenario would be the worst-case outlook for the future political development of the country as a hung parliament would be a guarantee of stillness both in terms of the economic program and structural reforms,” said Annalisa Piazza, an economist at brokerage firm Newedge, in the article.

Italy’s FTSE MIB index still managed to close in the green Monday despite a volatile session. U.S-based ETFs tracking foreign countries don’t always trade in-line with local stock indices due to time-zone differences.

The Italy ETF was off nearly 3% on Monday afternoon in above-average trading volume.

iShares MSCI Italy

italy-etf-ewi

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