BENETTON, THE LAST PICK HIKE IN PIAZZA AFFARI. CAN THE DECLINE OF THE ENGLISH STOCK STOCK BE STOPPED?
“By now the vast majority of trading on the stock exchange concerns the forty most liquid stocks (over 90% of daily trading) and is mostly dictated by considerations of arbitrage with respect to indices or other markets. The rest of the list is completely irrelevant with almost non-existent liquidity regardless of the fundamentals of the companies in question: the stock market therefore seems to represent less and less of the Italian economy”. Just a week after that Michele Calzolari, president of Assosim, pronounced this judgment at the AIAF conference in the context of a report dedicated to the "marginalization of the Italian financial market"news arrived of the delisting of Benetton, entered in Piazza Affari in July 1986.
A new blow to the market's credibility, which is less and less representative of the country's economic reality and, whatever the motivation behind Benetton's decisions, judged useless in the context of a possible relaunch or sale. This confirms the metamorphosis of the stock market, especially the Italian one: from a channel for financing companies through the collection of savings, to a structure that distributes money to shareholders by buying back minorities (delisting) or through buybacks.
A phenomenon that promises to extend in the coming months. There are already rumors (denied, as is customary in this case) of a delisting for Saras or for various manufacturing companies which sail on quotations much lower than those of the IPO. A survey by Angelo Provasoli and Michele Preda, still current, reported three years ago that out of 80 listed family-owned companies, as many as 57 were below the IPO price.
The two professionals singled out three causes at the origin of the phenomenon: 1) the scarce liquidity and the thin volumes of small caps; 2) the lack of effectiveness in communication policy towards the market; 3) the little attention to the market by the majority that "the more the share falls, the less it pays attention to the opinions of analysts and minority shareholders".
These traditional factors have been joined by two new ones, linked to the technological evolution of the markets and to the different regulation imposed by Mifid:
a) The decline of “traditional” intermediaries specialize in the traditional data-driven business, to the benefit of the specialized ones in online trading and high frequency trading, which favors liquidity (i.e. quantity) over quality. Trading techniques have been developed based on the transmission of a very high number of orders with a horizon of a few seconds or nanoseconds.
b) The progressive loss of importance of the Italian Stock Exchange: An increasing part of the trading of the most liquid securities takes place in London. Furthermore the importance of private lists is growing (about 150 dark pools are active in Europe).
These transformations have profoundly changed the nature of the market. As far as Piazza Affari is concerned, one can only acknowledge that the "market" does not significantly represent the country's economic reality or even less its search for a non-bank-centric financing channel. Today, the overall market capitalization is just over 20% of GDP. Furthermore, utilities, energy and banks account for more than 60 per cent of capitalization. The manufacturing industry accounts for less than 20%.
A state of endemic crisis in which the delistings are not surprising, but the impotence of the legislator and regulators who have some difficulty communicating also because the Commission website which was supposed to be closed on Saturday and Sunday for maintenance, is not working this morning. Almost as a symbol of the unequal struggle between the Golia trading algotraders, who have overwhelming means, and the supervisory authority..
Yet there should be a potential space for the development of a market for SMEs comparable to the English Aim or the French market (where thousands of companies are treated) there should be. Just as there should be room for one reflection on the role of the market which, at this rate, risks being reduced to a compensation fund for someone's troubles and misdeeds to the detriment of what remains of the people of savers. As demonstrated by the parable of the Ligresti group.
