Equity markets recovering since mid-March, despite October’s market correction
Since mid-March, European stock markets have recovered from the lows reached during the acute phase of the first wave of the pandemic. Investors have welcomed the effects of the agreement reached among European Union countries on the Recovery Fund, as well as the support offered by the ECB in keeping the risks of the banking system under control.
Markets then experienced a correction in October, when the second wave of infections has raised fears about the economic impacts of the new restrictions introduced, while the outcome of the upcoming presidential elections in the United States appeared uncertain.
Instead, investors' risk appetite returned in the aftermath of Joe Biden's victory on 3 November. In the face of a divided Congress, it seems unlikely that a huge fiscal stimulus package will be approved; which makes it more likely that the Fed will inject new funds into the system, actually supporting the share prices. Investors have also found an additional positive trigger in the news - released by some pharma companies - that a vaccine against the virus will be available soon.
Italgas stock has strongly outperformed the FTSE MIB
Italgas stock followed these underlying trends; from the year-low at 4.11 euro, recorded on 12 March, the stock started a wide recovery movement, which brought it back to a period-high of 5.7 euro on 12 August, and then retraced part of the rise, especially in October. In November, the price is again on the rise, approaching the levels of the beginning of the year.
Year to date Italgas has clearly outperformed the index of the blue chips on the Italian market, while it has moved substantially in line with the trend of the European utilities index. In October, the weakness of the stock with respect to the dynamics of the utilities sector index is also likely due to the disappointment of investors following the failure to convert into law the decree of last August, relating to gas tenders and Sardinia methanization of Sardinia.
A positive boost from the presentation of the new Strategic Plan
The price of the shock has risen again from 30 October, following the presentation of the new Strategic Plan, which was very welcomed. In particular, analysts and investors appreciated the significant amount of investments put into play to drive growth, the potential of entering into new businesses, the attitude of realism on the developments of green hydrogen and, last but not least, the features of the dividend policy, which offers strong visibility on the back of the floor at 0.256 euro and an option to benefit from growth.