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Barron’s: Buy the dip with Italy’s stocks? Why you may want to just say no

Italy’s stocks have gone on sale, thanks to the country’s latest political drama, but they haven’t necessarily become a great bargain.

When it comes to buying the dip, a bunch of strategists are saying, “No, grazie.”

A big issue for bears is that while Italy’s FTSE MIB equity benchmark I945, -0.92% has dived over the past month, the drop followed a year-and-a-half-long rally that had delivered a gain of more than 40%.

“Risk-reward going forward is weaker, given the strong run and the rising political overhang,” say JPMorgan strategists, led by Mislav Matejka, in a recent note. They have recommended taking profits on Italian stocks and instead rotating into German equities.

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