Read this guide for some essential information about the FTSE MIB, the index of the 40 largest companies on the Italian stock exchange. Information will help you to invest better!
The FTSE MIB is the Italian stock market’s main index and comprises its 40 most traded stocks. It can benefit investors in two ways: by helping them to better manage their stock portfolio and enabling them to invest in the index via ETFs that replicate its performance. Read our guide for more information.
To understand the history of the FTSE MIB index, you need to take a look at that of the Italian Stock Exchange, or Borsa Italiana. It was born from the merger of all Italian stock exchanges in 1997. The Borsa Italiana is based in Milan, hence the acronym MIB, which stands for Milano Italia Borsa.
At the time, the Milan Stock Exchange contained the MIB 30 index, composed of the 30 largest companies in Italy. In 2003, Borsa Italiana entered into a strategic alliance with Standard & Poor's to gain more credibility in the eyes of investors. The index became the S&P MIB 30.
In 2009, the London Stock Exchange (LSE) took over the Italian stock exchange. The index was replaced by the FTSE MIB. FTSE stands for Financial Time Stock Exchange, the same name given to the index of the London Stock Exchange. In the meantime, the stocks that make up the index increased to 40.
In September 2020, LSE sold Borsa Italiana after it acquired Refinitiv, a company specializing in financial data and infrastructure. As a result, the Italian stock exchange became part of Euronext from April 2021.
The stocks included in the FTSE MIB are selected according to their liquidity and market capitalisation. These represent approximately 80% of the market capitalisation of the Italian market. It should be noted that the Italian stock market has other indexes, such as the FTSE MIB Small Cap and the FTSE MIB Mid Cap.
The composition of the FTSE MIB index is updated twice a year, usually in March and September. It includes the most important Italian companies from various sectors such as finance, energy and telecommunications among others.
Here are 10 of the 40 companies currently listed on the FTSE MIB:
The Borsa Italiana is open from 8:00 a.m. to 5:35 p.m. Monday to Friday. However, transactions are only possible between 9 am and 5:30 pm. This is because the institution performs a pre-opening and pre-closing between 8:00 a.m. and 9:00 a.m. and between 5:30 p.m. and 5:35 p.m. respectively.
When the FTSE MIB falls below the Standard & Poor's rating, the base value of the FTSE MIB is aligned with that of the MIB 30. This happened at the close of the Italian stock exchange on 31 October 2003. The price was thus estimated at 10,644 points. The index price reached a record high of 50,108.56 points in March 2000.
The current FTSE MIB hit an all-time low in July 2012 when the price fell to 12,362.50 points. Since then, the index has moved in a sawtooth pattern year on year. In the last 4 months (from 26 February 2021 to 28 May 2021), the price has risen from 21,572.53 points to 25,169.39 points. The current price represents the best performance of the index in one year.
You can follow the evolution of the FTSE MIB price on the Euronext website on the Borsa Italia page or in real time on the trading platform of your online broker. You can also consult websites specializing in the financial market.
The performance of the FTSE MIB depends on the performance of its constituent stocks. When Italian companies are in good financial health, the index rises. Therefore, it is important to keep an eye on the financial results of these companies. The most highly valued companies such as Generali, ENEL, ENI, Telecom Italia and Unipol should be watched very closely.
The index is also influenced by political, economic and social environments. If all of these are stable, the situation is favorable for the FTSE MIB to increase in value. The situation regarding raw materials and spare parts that some Italian companies have to import should also be closely monitored.
The past has shown us that world events inevitably have an impact on the stock market. This was the case with the various financial crises, the oil crises, and recently, the Covid-19 health crisis.
Finally, the political and economic situation in Italy should also be monitored. A change of government, a new government policy, a new trade agreement, an update of the European Central Bank's interest rates... All this can influence the price of the index.
You can invest in the Milan Stock Exchange by buying some of the 40 stocks that make up the FTSE MIB. You can also buy each of the 40 stocks to replicate the performance of the index yourself. But this is a more time-consuming solution, as you have to buy each share in separate transactions. In addition, the transaction costs will mount up considerably.
You can also invest in the FTSE MIB by investing in ETFs or trackers. It is possible to speculate on ETFs as they are traded on the market like shares. They are subject to price fluctuations according to the evolution of the index price.
The FTSE MIB is among the global stock market indexes that can be invested in through an online broker. There are several reasons why investors may opt for this index.
Diversifying your investment portfolio
Spreading your investment in different stocks allows you to mutualize the risks. When some stocks fall, others rise to maintain a balance of gains. In our case, risk spreading is also geographical. The FTSE MIB is focused on the Italian economy. You can diversify your investment with other indexes, such as the CAC 40 (France), DAX (Germany), Dow Jones (USA), Nikkei 225 (Japan), etc.
The advantages of the FTSE MIB
This index has a high liquidity. In addition, investors can easily access various information to analyze and anticipate the evolution of its price. News about the Italian economy and companies is easily accessible.