"The Impact of the Italy-Switzerland Border Agreement and the Performance of Websim's Long Portfolio on Piazza Affari"

"The Impact of the Italy-Switzerland Border Agreement and the Performance of Websim's Long Portfolio on Piazza Affari"

Introduction:

The recent agreement between Italy and Switzerland regarding cross-border workers has brought several changes that aim to address issues such as double taxation. Simultaneously, Websim's Long Portfolio on Piazza Affari has shown impressive growth, driven by the performance of blue chip Italian stocks. In this article, we will explore the common points between these two developments and provide actionable advice based on the current market trends.

The Italy-Switzerland Border Agreement:

The agreement was necessary to resolve unsustainable situations for cross-border workers, including double taxation in Italy and Switzerland. It also regulates other tax-related matters concerning income and wealth. With 239 votes in favor and none against, the agreement's final passage occurred following its signing in Rome on December 23, 2020.

Websim's Long Portfolio Performance:

Websim's Long Portfolio on Piazza Affari has experienced a remarkable growth of 37% since the beginning of 2023. Notably, Unicredit has played a significant role in driving this growth. The performance of individual stocks has been compared to the benchmark indices to provide a consistent analysis. The FTSEMIB index, in particular, has shown a 25% increase since the start of 2023, making it the top performer in the Eurozone.

Insights:

The positive trend in the Italian and global economy, as well as the optimistic quarterly reports, has led to a further increase in profit estimates for 2023 and 2024. This upward revision has contributed to the portfolio's outperformance, with gains of 16.7% in 2023 and 11.2% in 2024. Additionally, sectors such as industrials and banks have experienced significant growth, making them among the best performers both monthly and year-to-date.

However, caution remains regarding economic growth in the second half of 2023 and earnings growth. Despite this, the market continues to trade at attractive multiples, slightly above 9x expected earnings. The geopolitical situation remains uncertain, and monetary policies will be influenced by macroeconomic data, suggesting a potential pause in interest rate hikes. Overall, companies show positive signs in terms of capital distribution through dividends and buybacks, with banks reporting no significant concerns regarding credit quality deterioration.

Actionable Advice:

• 1. Maintain Selectivity: With the possibility of increased selectivity in the coming months, it is crucial to prioritize sectors with high visibility. Keeping a constructive view on the markets, focus on stocks with strong growth prospects and solid fundamentals.

• 2. Stay Cautious during August: August is traditionally a quieter period with fewer microeconomic news and the potential for negative surprises on the macroeconomic and geopolitical fronts. Consider adopting a more prudent position during this vacation-heavy month.

• 3. Take Profits and Increase Cash Position: Taking advantage of the positive performance, consider selling stocks that have seen substantial gains. In this case, Websim suggests selling Interpump, which has gained 17% since the beginning of the year. Simultaneously, increase the cash position from 10% to 20% to ensure liquidity and mitigate potential risks.

Conclusion:

The Italy-Switzerland Border Agreement and the performance of Websim's Long Portfolio on Piazza Affari highlight the positive developments in the economy and the stock market. By leveraging the insights provided, investors can make informed decisions and navigate the market with greater confidence. The key lies in maintaining selectivity, exercising caution during quieter periods, and adjusting positions to secure profits and maintain liquidity.