A quick look at the FTSE MIB chart is enough to see why investors who backed Italian stock markets have been richly rewarded in the first half of 2026.
On Monday, July 13, 2026, Italy’s market regulator Consob’s annual report highlighted the latest milestones reached by the benchmark index of the Borsa Italiana.
On June 19, the FTSE MIB climbed to a new all-time intraday high of 53,188 points, breaking above the 53,000 threshold for the first time in history.
The index had already posted its highest-ever closing level two trading sessions earlier, on June 17, ending the day at approximately 52,595 points.
Year to date, the FTSE MIB is up more than 17%, following a 31.5% gain in 2025, its strongest annual performance in two decades.
In recent sessions, however, Italian stocks have pulled back from record highs as investors reassessed geopolitical risks following the collapse of the ceasefire between the United States and Iran.
Markets have also become increasingly concerned about whether the artificial intelligence (AI) stock rally can be sustained after months of exceptional gains.
Money.it interviews: How to position for Italian stocks after the rally
Money.it spoke with several international market professionals to understand whether Italian equities still offer attractive opportunities after such a strong run, and whether the FTSE MIB has further upside.
Beyond geopolitics, the experts were asked which factors are likely to become the next major market catalysts for Italian stocks.
Geopolitical tensions are only part of the picture.
Domestic economic conditions, monetary policy and political stability continue to shape equity performance across Europe.
At the same time, investors must consider that Milan’s stock market has already delivered exceptional returns in an environment where uncertainty remains the defining feature of global financial markets.
Another major theme is the renewed wave of banking sector consolidation in Italy, with MPS, UniCredit, Intesa Sanpaolo and Banco BPM once again at the center of M&A speculation.
ECB interest rates remain the key driver. But watch the BTP-Bund spread
Paul Ferrara, Senior Wealth Counsellor and CIM® here at Avenue, an independent private wealth management firm specializing in the long-term growth of our clients’ wealth in global markets, believes investors are still underestimating the long-term implications of consolidation within Italy’s banking sector.
According to Ferrara, fewer competitors typically translate into higher profit margins and stronger returns on equity, although greater market concentration also introduces new risks: “Bank consolidation in Italy is changing the shape of the Italian banking industry, and many investors have not yet fully accounted for it. Smaller amounts of participants lead to increased margins and higher capital returns”.
Having said that, “there is a concentration risk” and since “the post-migration capital return narrative is where the capital returns either accumulate or disappear, the banks that successfully execute integration are the ones investors should own .”
Ferrara applies the same logic to the European defense sector, mentioning Leonardo’s shares.
“That relates directly to the defense story. The order book for Leonardo is more interesting than the number of times it’s been quoted suggests. It isn’t whether these companies are good companies, it’s whether you’re paying a fair price for what you’re getting”.
Ultimately, he argues, the key question is not whether Italian companies are fundamentally strong, but whether investors are paying a fair price for the value they offer.
ECB rate path remains the biggest variable, but investors shouldn’t ignore Italy’s bond market.
Ferrara acknowledged that Prime Minister Giorgia Meloni’s government has surprised markets with stronger-than-expected fiscal discipline, helping contain volatility in the Italian-German government bond spread.
At the same time, he cautioned that Italy remains vulnerable to sudden political shocks.
“In this regard, the key variable for the Italian stocks in the near term is the ECB rate path, to cite the most important. But Meloni’s fiscal discipline has caught out markets, which has helped to keep spread volatility in check. However, a sudden crisis strikes Italy in the form of political turmoil”.
“Government stability is creating a false sense of security”
Steve Case, a UK based financial and insurance consultant at Insurance Hero, shares a broadly constructive view on Italy:
“Right now, I’m a little bit on the fence about Italy, being a little overweight. Valuations are in line and declines in rates are driving capital away from markets deemed too volatile to keep significant sizes. The banks have cleaned up their balance sheets and political stability, though precarious, is building up enough confidence for foreign investors”.
He also noted that Italian banks have significantly strengthened their balance sheets and that the country’s relative political stability has improved international investor confidence.
Despite these positives, Case remains cautious, warning that “the biggest risk that foreign investors are falling into is the political risk. The coalition has been in power for longer than expected and this has given everyone a false sense of security ”.
For foreign investors, he argues, political risk remains the biggest threat to the Italian stock market.
His main concern is the BTP-Bund spread, warning that if it were to widen beyond 200 basis points, institutional investors would quickly move into risk-off mode.
Retail investors, by contrast, would likely underestimate the significance of such a move:
“As the divergence between the average spreads of the 10-year Italian and 10-year German bonds grows wider than 200 basis points, then institutional investors are on the clock and most retail investors do not even pay attention”.
On banking consolidation, Case believes mergers are progressing faster than expected, highlithting that “while the early stages of M&A activity are often volatile, banks that acquired attractive targets three to five years ago are now generating the strongest return on equity (ROE), a pattern previously seen in the UK financial sector”.
The FTSE MIB rally can continue, but investors should become more selective
Speaking to Money.it, Independent Finance & Technology Consultant Francisco Matilla Serrano believes Italian stock market still have room to outperform: “My overall view is that the Italian equity rally can still extend, but the easy part of the rerating has probably already happened”.
As a result, he would now adopt a far more selective investment approach rather than taking a broadly bullish stance on the entire FTSE MIB: “From here, I would be more selective rather than broadly bullish on the whole index”.
According to Serrano, Italy has benefited from a particularly favorable combination of factors:
“The FTSE MIB has benefited from a very specific combination of factors: bank profitability, capital returns, consolidation expectations, defense spending, infrastructure exposure and relatively attractive valuations compared with some other European markets. That is a powerful mix”
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However, he warns against confusing stock market momentum with structural improvements in Italy’s economy.
The country continues to face low economic growth, fiscal constraints and sensitivity to government bond yields: “It is important not to confuse index momentum with a structural transformation of the Italian economy. Italy’s macro picture remains low-growth, fiscally constrained and sensitive to bond yields”.
So Serrano’s “base case would be that the Italian market can continue to perform well over the next 12-24 months, but with lower upside asymmetry than investors had one or two years ago”.
From an asset allocation perspective, Serrano would maintain a neutral to modest overweight position in Italy, but only selectively:
“If I had to frame Italy from an allocation perspective, I would describe it as neutral-to-modestly-overweight, but only selectively. I would not want broad exposure to everything that has gone up. I would prefer companies with visible earnings, strong balance sheets, capital return discipline, and exposure to structural themes such as defense, infrastructure, energy transition, banking consolidation or industrial automation”.
His investment philosophy is straightforward: “After such a strong rally, stock selection matters more than country exposure”.
Antonio Prigiobbo: “Invest in Italy because of innovation, not patriotism”
Money.it also interviewed Antonio Prigiobbo, founder of civic startup accelerator NAStartUp and a long-time innovation ecosystem expert.
He says that he has “no bias against Italian stocks”, adding that “however, the Italian stock market remains heavily concentrated in banking, energy and utilities, while it still has relatively few major technology players”.
Elsewhere in Europe, Prigiobbo says that he looks “with interest at Germany, the Netherlands and the Nordic markets ”.
Nevertheless, he believes investors often underestimate the strength of Italy’s industrial base: “Italy has industrial supply chains and expertise that the market often fails to fully appreciate”.
For this reason, he believes Italian stock market can continue outperforming Europe, but not across the board and that following the strong recovery in several sectors, investors will need to become increasingly selective and valuation-conscious.
Prigiobbo, who also works as a business designer and innovation journalist, argues that investors should focus on companies capable of combining manufacturing excellence with technological innovation and international competitiveness.
He cites Bending Spoons’ Nasdaq listing as an important milestone, demonstrating that globally competitive technology companies can emerge from Italy and attract international capital:
“My investment thesis is to focus on the Italy that innovates, exports and develops technologies capable of competing globally. Bending Spoons’ Nasdaq debut is an important signal: it shows that Italy’s ecosystem can also produce global technology companies capable of attracting international capital and competing in the world’s most ambitious markets”.
Looking ahead, he sees the biggest positive catalyst for Milan-listed stocks as a sustained return of international capital flows into Europe, supported by investment in industry, defense and technology:
“The main positive catalyst would be a sustained return of international capital to Europe, supported by investment in industry, defense and technology”.
The greatest downside risk, meanwhile, “would be a combination of slower economic growth, worsening geopolitical tensions and tighter financial conditions”.
Prigiobbo’s final message seems directed particularly at Italian retail investors tempted to buy domestic assets purely out of national pride:
“Italy should not be bought out of patriotism. It should be studied carefully, looking for value in companies capable of combining industry, technology and an international vision”.
