Italy is electing a new president

Italy is electing a new president
Italy is electing a new president
(c) unsplash
Share post:

Italy is about to elect a new president of state. The election that will be held from 24 January 2022 in several ballots is going to determine the successor of the current, 80-year old President Sergio Mattarella, whose mandate expires in February 2022. This was announced by the president of the chamber of deputies of the Italian parliament, Roberto Fico.

Mario Draghi, current prime minister, has indicated he is willing to take the job

Even though in parliamentary democracies the role of the president of state is of limited relevance to everyday politics, this election is of big political significance because the current prime minister of Italy, Mario Draghi, might run for office. Draghi indicated he was willing to take office in his year-end speech.

The 74-year old Mario Draghi is particularly well known as former president of the European Central Bank (2011-2019), when he established a reputation as good crisis manager; he confirmed this reputation as prime minister of Italy.

The big symbolic relevance of the presidential election is that Draghi would not be able to insert himself and his abilities as crisis manager into Italian everyday politics any longer. He would have to step down as prime minister immediately after his election as president of state.

Reform efforts could slow down

In addition to the worries that the current reform efforts in Italy could slow down, there is also the concern that snap elections could be held in Italy, which could result in a move to the right.

According to the most recent polls by the polling firm “Demos”, which were published in the daily newspaper “La Repubblica” at the end of December, these worries are not unfounded. While the “Partito Democratico” (PD) would come out on top again at 21%, the right-wing party  “Fratelli d’Italia” (FDI – The Brothers of Italy) would be a close second at 20%. Lega Nord with Matteo Salvini would come in third at 19%. The populist Five Star Movement would have to content itself with 16%.

Yields of Italian government bonds on the rise

On the capital markets, this situation is reflected in the drastically widening interest rate differential between 10Y Italian government bonds and German government bonds. Said differential widened from its low of about 0.90% at the beginning of 2021 to its high (especially around the end of 2021) of above 1.35%, despite the massive purchase programme by the ECB.

Italian government bonds account for about 22% of euro government bonds

Italian government bonds account for a significant share of euro government bonds. Therefore, the market participants are closely monitoring the development in Italy, as it has a noticeable bearing on the yields on the government bond market of the Eurozone overall.

Interest rate differential between 10Y Italian government bonds and 10Y German government bonds (in percentage points)

Sources: Refinitiv Eikon, 1 January 2016 – 4 January 2022, Erste Asset Management; in percentage points (1 = 100 percentage points)

The Italian president of state is elected by the joint session of the parliamentary chambers and representatives of the 20 regions. The ballots are secret, and a two-thirds majority is required. It is therefore not uncommon for the presidential election to require several ballots. This time, it will be one ballot per day. After three ballots, a simple absolute majority is sufficient. The election in 1971 holds the current record at 23 ballots and 16 days. The presidential term is seven years.

The centre-right parties Lega, Forza Italia, and Fratelli d’Italia seem to be prepared to support the candidacy of four-time Prime Minister Silvio Berlusconi. Next week we will find out whether Mario Draghi will run for office and whether he will be elected.

Legal note:

Prognoses are no reliable indicator for future performance.


Leave a comment Required fields are marked with *

Your email address will not be published. Required fields are marked *

Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH.Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version.Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.