Nicholette MacDonald-Brown, European Equities Fund Manager, gives her views on what the Italian elections mean for the European equities market:
"Confusing Italian election exit polls yesterday afternoon have resulted in the market running the full gamut of emotions over the last twenty four hours. With an initial rally on polls indicating a Bersani victory to a fall on the realisation that the senate is hung with no clear majority winner. With the final detail still to be announced, the election appears to have resulted in a stale mate for Italian politics. While always a possibility, few expected the election to be such a close call with the swing factor proving to be the rise of the 5 Stars Movement. The unexpected surge in votes for the 5 stars movement led by comedian Beppe Grillo means that the market hoped for "reformist" coalition of Bersani and Monti combined do not control enough seats to control the Senate, leaving the Italian road map to debt reduction and economic growth unclear.
"We would consider this result a mixed blessing. Clearly markets hate uncertainty, and this election and the complexities of the Italian system mean that this apparent stalemate is with us for a few months. However ultimately we believe this could be a wakeup call for Italian voters and politicians which could result in a new, cleaner electoral system and an elected government with a clear reform mandate which would be good for both the country and the European equity market."
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