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Capital markets in Italy - Mid-year update
CAPITAL MARKET IN ITALY - MID-2026 UPDATE
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| Macro-financial landscape In the first half of 2026 global financial markets were shaped by renewed geopolitical tensions which disrupted energy markets and altered the balance of risks for growth, inflation and financial conditions. The outbreak of hostilities in the Gulf region and the ensuing disruption of maritime traffic through the Strait of Hormuz represented a major shock to global energy markets. The Strait remains one of the world's most critical energy chokepoints, accounting for roughly one quarter of global seaborne oil trade and close to one fifth of global Liquefied Natural Gas (LNG) trade. Despite visible signs of recovery in shipping activity following the easing of tensions in June, traffic levels remained significantly below their historical norms, highlighting the persistence of logistical, security and insurance-related constraints. ... more |
| Energy markets reacted swiftly to the shock. Brent and WTI crude prices rose by around 41% and 32%, respectively, between 27 February and their intraday peaks on 9 March 2026. European natural gas prices reacted even more sharply, with Dutch TTF prices more than doubling over the same period (+64%), although they remained far below the peaks recorded during the 2022 energy crisis. Despite a substantial subsequent correction, Brent, WTI and TTF ended the first half of 2026 approximately 23%, 15% and 52% higher, respectively, than at the end of 2025. The transmission of the energy shock to financial markets differed markedly from previous episodes. Historically, oil price volatility and broader market volatility tended to move together. However, during the first half of 2026, the sharp increase in oil market uncertainty was not accompanied by a comparable increase in equity market volatility. The economic consequences of the shock are uneven across countries, depending on their energy mix. Coal-heavy economies, such as China and India, and net exporters of fossil fuels, such as the US, are likely to be less affected. European countries remain the most exposed because of their greater reliance on imported fossil fuels, with France representing a partial exception. Italy’s relatively high share of gas and oil, at 76% of total energy sources, suggests a comparatively higher sensitivity to energy price pressures among major EU economies, whereas countries with greater nuclear or renewable capacity face lower direct sensitivity to fossil-fuels price fluctuations. Against this backdrop, global growth dynamics became increasingly heterogeneous. After a relatively strong performance in 2025, leading indicators of economic activity - forward-looking measures that anticipate changes in the economic cycle - began to diverge across countries during the first half of 2026. The US remained broadly resilient, supported by domestic demand and investments in technology-related sectors, while China experienced a more pronounced cyclical slowdown. Several major European economies, including Italy, Spain and the UK, exhibited signs of weakening momentum. After the outbreak of the conflict in the Middle East, higher oil prices exerted visible upward pressure on headline inflation. In the US, annual inflation rate rose from 3.3% in March to a peak of 4.2% in May, before declining to 3.5% in June. A similar, though less pronounced, pattern emerged in the euro area, where inflation increased from 2.6% in March to 3.2% in May, before easing to 2.8% in June. In Italy, harmonised inflation accelerated more sharply, from 1.6% in March to 3.2% in May, before edging down to 3.1% in June. Despite the rapid transmission of higher energy costs, the inflationary impact has therefore remained substantially more contained than during the 2022 energy crisis. Against this backdrop, the ECB raised its key policy rates by 25 basis points in June, bringing the deposit facility rate to 2.25%, in response to renewed upside risks to inflation. The Federal Reserve, by contrast, maintained the federal funds target range at 3.50–3.75%, adopting a more cautious monetary policy stance. Risk-free interest rates in both the euro area and the US remained below the highest levels reached during the last monetary tightening cycle in 2023. At the same time, futures markets continued to price a modest increase in interest rates during the second half of 2026, reflecting expectations that central banks will remain cautious in the face of renewed energy-driven inflationary pressures. Public debt sustainability remains an important source of vulnerability over the medium-term. Several advanced economies are expected to maintain debt ratios above their historical averages, including the US (125.8% of GDP in 2026 versus a 10-year average of 117.2%), the UK (103.6% versus 95.1%) and France (118.4% versus 107.1%). By contrast, public debt ratios in Japan and Spain are projected to remain below their historical averages, while Italy’s ratio is broadly unchanged at around 138%. Fiscal balances also exhibit considerable cross-country heterogeneity: deficits remain particularly large in China (8.2% of GDP), the US (7.5%) and India (7.4%), while Germany’s deficit is expected to reach 3.8%, well above its 1.2% historical average. Conversely, Italy’s deficit is projected at 2.8%, significantly below its 10-year average of 4.9%. Elevated debt burdens, combined with still relatively high interest rates, imply uneven fiscal buffers and varying capacity to respond to future economic shocks. Gold prices reached new historical highs at the beginning of 2026, supported by strong investment demand and continued central-bank purchases. However, the subsequent rise in oil prices and interest-rate expectations triggered a partial correction in gold prices, amplified by profit-taking and ETF outflows after a prolonged rally. Crypto-assets experienced an even sharper reversal. Bitcoin prices fell markedly in early 2026, recovered between April and mid-May, and then resumed their decline through June, ending the first half well below January levels. The latest downturn was amplified by Strategy (one of the market’s most prominent structural buyers) shifting towards more active capital management and potential bitcoin monetisation. This episode underscores bitcoin’s volatility and its sensitivity to changes in the behaviour of large market participants. Since 2020, bitcoin has also maintained relatively high correlations with US equity indices, reaching around 50–60% in H1 2026, while its links with euro-area equities and gold have remained considerably weaker. This suggests that bitcoin continues to behave primarily as a risk-sensitive asset, limiting its effectiveness as a portfolio hedge or safe haven. |
| Financial markets performances During the first half of 2026, global equity markets proved remarkably resilient to geopolitical shocks and have continued their long-term rally After the correction triggered by the outbreak of the conflict in the Middle East in late February, most advanced-economy markets recovered quickly as geopolitical tensions eased after the April ceasefire. By mid-year, major equity indices had reached new highs, led by Japan, where the Nikkei gained 39.2%, followed by the United States, with the S&P500 rising by 9.6%. ... more |
| Similar trends were observed across the major euro-area equity markets, which recovered strongly in the second quarter and reached record highs by the end of June. The Ftse Mib delivered the strongest H1 2026 performance, rising by 15% after a 1.4% decline in Q1 and a 16.6% rebound in Q2. It outpaced the Ibex35, which gained 12.5%, while Cac40 and Dax30 recorded more modest increases of 3.1% and 2.1%, respectively. The Ftse Mib also surpassed its March 2000 peak by around 5%, setting a new all-time high after more than 26 years. While advanced-economy equity markets generally recorded positive returns, performance across the main emerging Asian markets was more mixed. South Korea and Taiwan strongly outperformed, supported by their sizeable exposure to the semiconductor and technology cycle. By contrast, mainland China and Hong Kong lagged amid subdued domestic demand, persistent weakness in the property sector and softer growth, while Indian stock index performance was constrained by limited exposure to semiconductors, AI hardware and digital infrastructure, and a less supportive macro-financial backdrop, characterised by capital outflows and rupee depreciation. South Korea’s outperformance was particularly pronounced, with the KOSPI rising by 101%. The rally was driven mainly by semiconductors and telecommunications equipment reflecting the country's strategic role in AI hardware and memory-chip production. A similar pattern emerged in the US, where semiconductor stocks recorded the strongest gains within the S&P500, while telecommunications equipment also posted positive returns. Software-related segments, however, delivered more mixed results, with packaged software declining in both indices. Compared with 2025, when software and digital-platform segments performed more strongly, this points to a shift in technology-sector leadership towards AI-related infrastructure, including chips, networking and telecommunications equipment. Whereas gains in 2025 were more broadly distributed across software- and hardware-related segments, in H1 2026 they became increasingly concentrated in the physical infrastructure underpinning the expansion of artificial intelligence. More broadly, AI-related equities remained supported by strong structural growth prospects, although market momentum weakened. After substantial gains in the previous two years, the Indxx Global Robotics & Artificial Intelligence Thematic Index rose by only 4.6% in H1 2026, compared with 14.2% in 2025 and 39.3% in 2024. This moderation points to a more mature and selective phase for AI-related stocks, in which earnings delivery and valuation discipline are becoming increasingly important. This sectoral pattern is also evident in the contribution of individual industries to benchmark-index performance across countries. Concentration was particularly pronounced in the United States, where communication services and technology accounted for more than 60% of the S&P500’s overall performance. In the EuroStoxx50, these sectors also made the largest contribution to gains in the first half of 2026. The Italian market displayed a more diversified pattern: financials remained the largest contributor to Ftse Mib performance, while technology-related stocks provided a meaningful boost despite their relatively limited index weight. Taken together, these developments confirm that artificial intelligence remained the dominant equity market theme in the first half of 2026, although the beneficiaries varied across regions and along the AI value chain. This concentration of returns also had implications for market valuations. The S&P500 continued to trade at elevated multiples, with its P/E ratio remaining above historical norms throughout most of 2025 and the first half of 2026, reflecting sustained investor confidence in long-term earnings growth, particularly in technology-related sectors. The Euro Stoxx50 and the Ftse Mib also recorded further multiple expansion during the first half of 2026, alongside the broad recovery in European equity prices. Turning to market risk conditions, the geopolitical shock generated only a moderate increase in volatility. Volatility remained well below the levels observed during major episodes of market stress, including the Covid-19 pandemic, the Global Financial Crisis and the so called ‘Liberation Day’. In the Italian equity market, liquidity conditions initially worsened following the outbreak of the conflict. The turnover ratio and the Amihud illiquidity indicator increased simultaneously, indicating that stronger trading activity was accompanied by a larger price impact and weaker liquidity. From the end of May 2026 onwards, however, the two indicators resumed moving in opposite directions, consistent with the restoration of the more typical inverse relationship between trading activity and illiquidity as market conditions stabilised. Turning from equity markets to fixed income, the geopolitical shock also generated a temporary but broad-based repricing across both corporate and sovereign bond markets. The Iran conflict triggered a sharp and largely synchronised increase in investment-grade corporate bond yields across major economies. As tensions eased, yields partially retraced, although they remained above their pre-conflict levels. European credit risk followed a similar pattern: the spread between investment-grade and high-yield CDS indices widened to almost 280 basis points at the height of the stress before returning close to its initial level by June. Sovereign bond markets displayed a comparable, predominantly temporary reaction. Government bond yields rose across countries following the outbreak of the conflict, with only limited cross-country divergence, before easing as geopolitical tensions subsided. In Italy, the BTP–Bund spread widened only briefly and subsequently moved back close to pre-conflict levels. At the same time, stock–bond correlations turned positive in both Italy and the euro area, temporarily reducing the diversification benefits traditionally associated with government bonds. |
| Capital markets development Equity market capitalisation relative to GDP increased in most major economies between 2017 and 2026, with the strongest gains recorded in the United States, Japan and India. Within the EU, developments were more uneven, with the largest increases observed in the Netherlands, Sweden, and Italy. ... more |
| Significant cross-country disparities nevertheless persist, reflecting different levels of equity-market development and reliance on market-based financing. The United States remains the dominant global market, accounting for 45% of world equity capitalisation compared with 26% of global GDP. This disproportionate financial weight reflects not only the size of the economy, but also deeper capital markets, higher valuations and the prominence of large listed technology companies. By contrast, the EU accounts for 18% of global 2025 GDP but only 9% of global market capitalisation in May 2026, with a market-cap-to-GDP ratio of 71%, pointing to persistent structural differences in listing activity, investor participation and capital-market development. China presents a different pattern: despite its large economic size, its share of global equity capitalisation has remained broadly stable, confirming that GDP scale does not automatically translate into deeper listed markets. However, greater market size has not necessarily been accompanied by broader diversification. In several major indices, capitalisation growth has become increasingly concentrated in a limited number of large constituents, narrowing the effective investment base and increasing the influence of mega-cap companies on aggregate market performance. This trend can be captured by the Herfindahl–Hirschman Index (HHI), an indicator based on the market-capitalization weight of each constituent within an index. The HHI declines as market capitalization becomes more concentrated in a small number of stocks and can be interpreted as the effective number of stocks driving index performance. Between 2015 and 2026, the HHI points to a decline in the effective number of stocks across most major equity indices: in the S&P500, the measure fell by 65%, from 132 to 47, while in the KOSPI the decline reached approximately 90%. The SSE Index was the only exception, recording an increase in the effective number of stocks from 101 to 141. Private markets showed mixed dynamics over 2025 and the first half of 2026. In private equity, fundraising conditions improved globally after the sharp contraction recorded in 2025, while investment and exit activity weakened significantly amid heightened uncertainty. Private credit proved more resilient in lending activity, particularly in Europe and Italy, although fundraising remained subdued. In more detail, global private equity (PE) fundraising reached $262 bn in H1 2026, up 17% from $223 bn in H1 2025, suggesting a more favourable fundraising environment than in 2025, when fundraising had fallen 27% globally and 37% in Europe. By contrast, PE investment activity slowed markedly. After strong expansion in 2024 and 2025, global deal value declined for two consecutive quarters in 2026, falling from about $544 bn in Q1 to $420 bn in Q2, a 23% quarter-on-quarter decrease and 35% below the peak recorded in Q4 2025. Weakness was particularly pronounced in the US, where deal activity in Q2 2026 was 43% below Q4 2025 levels, while Europe experienced a more moderate decline (-22%). Exit activity followed a similar pattern. Global PE exits fell from $343 bn in Q1 2026 to $275 bn in Q2 2026, a decline of about 20%. While the global contraction was largely driven by the US market, European exit activity diverged from this trend, recording a strong rebound in Q2 2026 of around 29%. In Italy, PE market activity weakened in 2025. Funds raised by Italian operators declined to approximately €3.6 bn, compared with about €6.7 bn in 2024 (-46%). Total investments fell from €14.9 bn to €11.6 bn (-22%), mainly reflecting a sharp contraction in infrastructure investments. Nevertheless, deal activity recovered during the second half of the year, with the annual number of transactions returning to 2022 levels. Sectoral developments were heterogeneous: infrastructure investments halved compared with 2024, buyout/expansion investments decreased more moderately (-8%, from about €7.8 bn to €7.2 bn), while venture capital expanded strongly, rising 46% to €1.3 bn. Exit activity also declined, with divestments falling to around €4.7 bn, compared with €5.7 bn in 2024 (-16%). Financial markets are undergoing a structural transformation. Historically, private markets primarily financed the early stages of business development, while corporate expansion was largely funded through public capital markets. Today, private financing increasingly supports not only start-ups but also the growth and scaling of companies, particularly in technology-intensive sectors with a high share of intangible assets. This trend is especially pronounced in artificial intelligence. Several indicators highlight this shift. A comparison of the largest public and private capital-raising transactions shows that venture capital deals exceed IPOs in both total proceeds and average deal size. Despite a recent record-breaking U.S. IPO, the largest equity financing transaction on record was a private funding round completed in April 2026, when a leading AI company reportedly raised USD 122 billion. Moreover, while the ten largest IPOs span the period 1997–2026, all of the largest private-market transactions have occurred within the past two years. Taken together, these developments indicate that the boundary between private and public markets has shifted markedly along the corporate life cycle. An increasing share of corporate financing and value creation now occurs before companies enter public markets. Private credit presented a different picture. Global fundraising declined from $241 bn in 2024 to $234 bn in 2025 (-3%), the lowest level since 2021. In Italy, fundraising fell more sharply, from €1.4 bn to around €1 bn (-26%). Lending activity, however, remained comparatively robust. In the United States, direct lending totalled about $247 bn in 2025, down 11% year-on-year, before weakening further in 2026, with volumes estimated at $45 bn in the three months to 31 May, around 40% below Q1 2026 levels. Market volatility, geopolitical uncertainty, and outflows from technology-related and retail products were identified as key factors behind the downturn. In Europe, direct lending reached €41.4 bn ($48.6 bn) in 2025 and €8.3 bn ($9.6 bn) in Q1 2026. Italy stood out for the continued expansion of private credit provision, with lending volumes increasing by 33% year-on-year to around €6.8 bn ($7.9 bn) in 2025. Activity was almost evenly divided between loans granted (50% of lending) and bonds underwritten (49%), highlighting the growing role of private credit as a source of financing for Italian companies. |
| Primary markets trends Over the past decade, global primary equity markets have followed increasingly differentiated trajectories, with China emerging as the leading jurisdiction in terms of IPO fundraising. Between 2015 and 2025, Chinese IPOs raised approximately $674 billion, surpassing the United States ($530 billion) and the European Union ($230 billion). ... more |
| More recent evidence confirms this ranking, with China maintaining a strong fundraising capacity throughout the last decade, while the US experienced a pronounced boom–bust–rebound cycle, moving from the record IPO activity observed in 2021, through the subsequent market correction, to the signs of recovery recorded in 2026. Europe, by contrast, has gradually lost relevance in global primary markets, recording structurally lower issuance volumes, a prolonged downward trend and no meaningful rebound in recent years. These developments suggest a growing concentration of global capital formation outside Europe and raise questions about the competitiveness of European public markets in attracting and retaining high-growth companies. The differences among the three regions become even more evident when considering the size and characteristics of IPO transactions. In the European Union, approximately three quarters of all IPOs raised less than $100 million over the last decade, confirming the predominance of relatively small offerings. By contrast, both China and the US display a considerably more balanced distribution, with a significantly larger share of transactions raising between $100 million and $500 million and above $500 million. Extremely large IPOs remain almost exclusively a US phenomenon, with transactions exceeding $10 billion virtually absent in Europe and only exceptionally observed in China. The role played by private capital also differs substantially across jurisdictions. Private equity and venture capital-backed companies account for around one-fifth of IPOs in both China and the US, compared with only 8.4% in the EU. This evidence highlights the more limited capacity of European private markets to finance companies through advanced stages of growth and to prepare them for listing. As a result, European public markets appear constrained both by a weaker pipeline of mature growth companies and by a predominance of smaller-scale transactions. At the same time, caution is warranted when interpreting these developments as evidence of a fully-fledged recovery in the IPO market. While the 40 IPOs completed in the US since the beginning of 2026 represent the highest figure recorded since 2021, activity remains below the long-term historical average of roughly 50 IPOs during the first half of the year. A similar pattern emerges at the global level. According to EY Global IPO Trends, the first quarter of 2026 recorded a decline in the number of IPOs across all major geographical areas compared with the corresponding period of 2025, despite the increase in aggregate proceeds. The current recovery therefore appears highly concentrated, with a limited number of exceptionally large transactions driving overall market volumes while the broader IPO ecosystem remains comparatively subdued. Against this international backdrop, developments in Italy reflect many of the broader challenges facing European public markets. The Italian main market, Euronext Milan (EXM), has experienced a prolonged phase of weak primary market activity, characterized by limited new admissions and a persistent prevalence of market exits. In the first half of 2026, listing activity nearly disappeared, with only a single translisting recorded and no IPO flow. More broadly, since 2023, delistings have consistently outpaced new listings, driven primarily by mergers and acquisitions and voluntary delistings. As a consequence, the market has recorded a continuous sequence of negative net delistings, including a net loss of three listed companies in the first half of 2026 alone. These developments point to a gradual contraction of the listed universe and confirm the difficulties faced by the Italian regulated market in replenishing the stock of listed companies through new admissions. The experience of Euronext Growth Milan (EGM) has been so far more favourable, although latest trends suggest that the market is moving towards a more mature phase of development. Throughout most of the period under review, EGM continued to attract new listings and served as the primary gateway to public equity financing for smaller and high-growth firms. However, listing activity has shown a clear downward trend since 2023, becoming increasingly uneven and weakening significantly during 2026, when recorded a net delisting of eight companies, as a result of three new listings and 11 exits Number of companies progressing from EGM to EXM has also declined markedly, with only two translistings recorded over the last two years. The evidence suggests that EGM remains an essential component of the Italian capital market ecosystem, while simultaneously exhibiting some of the characteristics typically associated with a more mature market, including lower listing momentum and increasing turnover among listed companies. Primary market dynamics keep on impacting – coeteris paribus – market capitalisation. Recently, however, the erosion of market value has slowed, partly because some of the largest delistings resulted from mergers between companies already listed on the market, thereby reducing the net loss of aggregate capitalisation. Nevertheless, delistings continue to exceed new listings in value terms, reflecting both the weakness of IPO activity and the departure of sizeable issuers. EGM has historically displayed greater resilience, supported by a steadier flow of smaller transactions. However, even this market recorded a negative balance during the first half of 2026, with a net reduction of nearly €150 million in market capitalisation. Overall, the evidence suggests that EXM and EGM continue to perform complementary functions within the Italian market: the former remains heavily influenced by a limited number of large transactions, while the latter continues to provide a more stable, although increasingly challenging, platform for equity financing and market access for smaller growth companies. In a European environment where both public listings and listed companies are becoming scarcer, strengthening the link between private capital, business growth and public market access remains a key policy challenge for Italy's capital market ecosystem. |
The Report was prepared by:
Paola Deriu (supervisor) - CONSOB, Head of the Research and Regulation Department (p.deriu@consob.it)
Federico Picco (coordinator) - CONSOB, Head of Research Unit, Research and Regulation Department (f.picco@consob.it)
Valeria Caivano (coordinator) - CONSOB, Research and Regulation Department (v.caivano@consob.it)
Francesco Fancello - CONSOB, Research and Regulation Department (f.fancello@consob.it)
Alberto Noè - CONSOB, Research and Regulation Department (a.noe@consob.it)
Greta Quaresima - CONSOB, Research and Regulation Department (g.quaresima@consob.it)
The authors acknowledge the contributions of Giuseppe Creatore to the analyses .
The opinions expressed in the Report are the authors' personal views and are in no way binding on Consob.