At a running pace, even at the cost of contradicting the number. The Gambero Rosso on the Aim price list, the "alternative market" of Piazza Affari dedicated to small and medium-sized enterprises, recorded a new double-digit increase on Thursday, 10%, consolidating a stellar increase: +239,40% in six months. But this is not an isolated performance. To limit ourselves to Thursday, at 12, five stocks on the freer (or less regulated, if you prefer) market of the Italian Stock Exchange, which took off with difficulty on 1 March five years ago, recorded double-digit increases. Between these Gala +14,72%, the fourth largest electricity supplier, the lily group, small international giant in e-commerce also active in China, +11,39% (+75% since January). It's still Mc-Link +12,42% (but +150% in 2017) born in 1986 as an IT magazine, today a major provider of innovative digital services. In the end WM Capital +16,33%, a company specialized in providing franchise services. So much euphoria that has been repeating itself, at accelerated rates, for some time now. On Tuesday, for example, seven stocks recorded double-digit gains.
The phenomenon has produced a forward "leak" of a list that was snubbed in terms of volumes and prices until yesterday. The Aim index marks an increase of 29,22% compared to the end of 2016, with a clear advantage on the main basket of the Italian stock exchange, the Ftse Mib which rises by 10,44%. But the Star does even better, the list of small and medium-sized companies in Piazza Affari that accept stricter requirements as a guarantee for investors. The index, not surprisingly the most followed by international investors, rises by 32,59% compared to the beginning of the year.
What is this rally due to? The explanation lies in three letters: Pir, which stands for Individual Savings Plans, the new investment formula that has brought about a revolution in asset management comparable to that of 1984, when mutual funds were introduced in the Bel Paese. The appeal for the new product can be explained by the fiscal discipline, suitable for promoting long-term savings. In fact, the Pir can be defined as a "tax container" reserved for individual savers and pension funds/social security funds. Their investments will be reserved the exemption from taxation of income deriving from investments made in the PIR. A great advantage compared to other forms of investment to which is added the exemption from tax on inheritances and gifts. In view of these advantages, subscribers must meet certain requirements: 1) the investment must last at least five years. 2) you cannot exceed 30.000 euros per year per natural person within an overall limit of 150.000 euros over 5 years.
So far the characteristics of a product that has had a long running-in in other countries. The first such measure was adopted by the United States in 1974. Then came France, which launched Plans d'Epargne en Actions (PEA) in 1992 to great acclaim, followed by the introduction of Individual Savings Accounts (ISAS) in the UK in 1999. But the example that concerns us most closely is probably the adoption of a similar mechanism by Shinzo Abe in 2014 in Japan, A country that has very similar problems to Italy in terms of savings and investments.
Ma the Italian legislator has introduced a strategic novelty: at least 70% must be invested in financial instruments issued by Italian and foreign companies (EU and EEA) with a permanent establishment in Italy , a very strong constraint which, according to Intermonte Sim , one of the main independent Italian brokers, “makes it extremely difficult investment outside of Italian financial instruments”.
Not only. Of this 70% at least 30% (equal to 21% of the total value of the investments of the PIR) must be invested in financial instruments issued by Italian and foreign companies (EU and EEA) with a permanent establishment in Italy other than the larger lists, such as the Ftse Mib or other equivalent indices (Dax, Cac 40, bex 35 or Ftse 100). A part of the funding, therefore, can still be invested in Italian blue chips, as evidenced by the favor garnered by companies with predictable profitability and high dividends (see Enel, +19,32% in the last six months), with relevant anti-cyclical virtues.
But most of all, the introduction of PIRs coincided with the take-off of interest in the universe of small and medium-sized enterprises, often snubbed by large operators, including the battleships of managed savings which until recently paid very little attention to a market segment that was too thin. “Since the PIRs were introduced in January 2017 - explained Anna Lambiase, CEO of IR Top Consulting - we have seen a doubling of volumes on AIM, gone from a daily average of 35 to more than 67 euros”. But Ir Top's estimates (1,25 billion in AIM by the Pir over the next 5 years) risk being largely exceeded by reality. For 2018, the office of the department of the Ministry of Economy expects individual savings plans to reach 180 for a total contribution of 4,5 billion euros. And so on until 2021, when the PIRs should reach a number of around 360 units for a total contribution that should be around 18 billion euros.
Obviously, these volumes of resources will not go to the Aim segment alone, but the Star and Mid caps are also compatible with the requirements of the PIRs, where the increase is already making itself felt to a significant extent. According to Eurizon specialists, mid-cap companies have nearly tripled the performance of blue-chip companies since the introduction of the PIRs. The phenomenon also affects funds, including ETFs. The most striking example of the benefit deriving from the arrival of PIRs on the Italian market is demonstrated by the performance of the ETF Lyxor Ftse Italia Mid Cap Ucits, the only one that was intrinsically "PIR compliant" before the savings plans arrived in Italy (ISAs, individual saving accounts, have existed in the UK since 1999). Although this product has been in existence for three years and has had a fluctuating trend, it has recorded a growth in value of approximately 29% in the last six months.
So the reform is working. Maybe too much. To avoid the bubble effect or other abuses to the detriment of the system and subscribers, it is necessary to increase the supply, in quantity and quality. As well as to defend savings you need to pay attention to the level of commissions. There are those related to underwriting, performance, any costs of account management, plus those of negotiation. In short, if you are not careful, the toy can break. And that would be a shame, given the unique opportunity to reduce the business system's reliance on banks.
