It is a double-speed Stock Exchange that emerges from a comparison of the performance of the six stock market indexes over the last 12 months. The main index Ftse Mib has archived a +2012% since September 7,8 while the indices of smaller capitalization companies have overall achieved double-digit performances. In detail, the Ftse Italia Mid Cap rose by 28,5%, the Ftse Micro Cap by 14,16%, and the Ftse Italia Star by 37,22%. The only exception is the Ftse Italia Small cap -5,35%. If we reduce the horizon to the last six months, the Ftse Mib rises by around 10,5% and gains a few positions compared to the Ftse Micro cap +11% but is still detached from the Ftse Mid Cap +17,78% and from the Ftse Italia Star +20,60% (the Ftse Italia Small cap remains behind at +2,29%).
A list in fact divided in two, with some SMEs traveling on the highs like the other major European and American indices, Dax and S&P 500, while the Ftse Mib is far from the historical highs. And it is said that, after such a long journey, the race will stop before that of the Ftse Mib. “The coming months will depend on the sentiment on the macroeconomic condition of Europe and on growth – explains Gabriele Roghi, head of investment consultancy at Invest Banca – SMEs can handle high multiples, higher than large caps because there is room to bet on growth in turnover, products and margins”. There are several reasons for the variation in performance between the indices:
1) The first consideration to remember is that in the Ftse Mib the weight of the banking sector is fundamental and, even if this sector has partially recovered, together with that of the telecommunications it is decisive for the underperformance of the Ftse Mib. “The growth of the index can only come from a newfound strength of banks, TLCs and utilities, which are feeling the effects of a rather asphyxiated market at the domestic level – explains Gabriele Roghi, head of investment consultancy at Invest Banca. Furthermore, compared to other major European indices, we must not forget that sectors such as materials and chemicals, which are more linked to the growth of emerging markets, are substantially absent from the Ftse Mib.
2) In general, small and mid caps are more export-oriented, therefore they are less exposed to the weak domestic economy and have greater flexibility. “The smaller companies have known how to navigate better – says Roghi – they often have greater production and project flexibility. Although impoverished in the crisis with closures and relocations, small businesses remain the real wealth of the country".
3) Luxury has certainly rewarded top players such as Tod's and Ferragamo who are in the Ftse Mib, but also smaller companies such as Brunello and Yoox. Especially since the small names are supported by the M&A ferment which could make them become targets as happened for Loro Piana, albeit not listed. Or think of the electronic components sector: there is not only Stm (Ftse Mib) but companies that make software are also present in the rest of the list, such as Eurotech +24,6% in the last six months. “Even companies like Brembo and Danieli or some mechanical stocks are at historic highs,” says Roghi. Brembo, for example, has risen by 54% in six months and by 11% in one year, but by 1% in one year.
Of course, on these lists the volumes are lower and the titles are generally thinner. “But the market has appreciated regardless of the relative size – says Roghi – there are fewer flows on these indices but this has not affected the increase in quotations. Yoox, for example, is a striking case: it started with little turnover and micro capitalization and then earned its stripes on the field”. And also on the Aim there have been news well received by the operators. “The new quotations were interesting – says Roghi – it was a sort of venture capital for everyone, it wasn't a question of capital to survive like the increases of the banks but of real bets of shareholders who become partners of the entrepreneurs because they believe in a project".
