UniCredit’s move has helped assuage investor fears as many observers are worried that Monte dei Paschi di Siena is at risk of failure.
Italian banking stocks have also been improving since the December 5 low after Prime Minister Matteo Renzi announced he would resign following the referendum defeat on December 4, which also fueled heavy short covering and further bolstered prices.
The Italian banking index is up almost 21% since the low on hopes that a new government and the European Central Bank could step in to lend a hand.
The strengthening banking outlook has a been a boon for the Italy-related ETFs, which include a large financial sector tilt. For instance, EWI holds 4.9% in UniCredit and a hefty 31.0% position in financials.
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