Economic report 2025 - CONSOB AND ITS ACTIVITIES
Capital markets in Italy
CAPITAL MARKETS IN ITALY
Economic report 2025
| Economic landscape In 2025, the global economy remained exposed to elevated uncertainty, reflecting shifts in geopolitical and economic relations. Rising protectionism has contributed to greater fragmentation and, in turn, to weaker growth prospects. A key source of uncertainty has been the new US approach to international trade policy. Although the protectionist measures ultimately implemented were considerably milder than those initially announced, US import tariffs remain above their pre-2025 levels. ... more |
| Nevertheless, international trade in goods was resilient in the first half of 2025 (+5% versus the same period of 2024). This performance is consistent with evidence of import front-loading ahead of anticipated tariff changes, despite the weakness of the US dollar. Alternative indicators of global activity available at higher frequency, however, point to a slowdown in international trade during the third quarter of 2025. Recent tensions between the US and the EU regarding Greenland and the threat of new trade tariffs have further increased uncertainty over future developments in the international trade. Current account balances in the world’s major economies have also adjusted to the changing global trade environment. According to the latest IMF estimates, the US is expected to record the largest deficit in 2025, at 4% of GDP (higher than its 10-year average), while Japan and China would improve their surpluses. In the Eurozone, the current account balance would remain positive, albeit on a smaller scale than the 10-year average. As for international capital flows, in the first half of 2025 foreign direct investments (FDI) inward flows (i.e. investments from abroad) remained unchanged in the US compared with the same period of 2024 while they increased in Japan and decreased sharply in China and the UK. Within the EU, the trend has been positive, with an increase in inflows. Sweden and Italy recorded the most significant growth in FDI inflows, with both countries achieving a share of the global FDI of 3%, compared to just over 1% in the first half of 2024. In addition to the dynamics of FDI, reflecting cross-border transactions through which foreign investors acquire a lasting interest over a resident company, the trends in foreign portfolio investment (FPI), attributable to cross-border investments in market-based financial instruments are also relevant. With specific reference to foreign portfolio investments in Italy, in the first nine months of the year most inflows were related to debt instruments, whereas foreign investment in Italian equity instruments slightly declined. A further source of market uncertainty concerns the evolution of fiscal policies. Geopolitical tensions have led several economies to announce or expand multi-year plans to increase defence spending, an especially demanding objective for countries with already-strained public finances. In the EU, the general government debt-to-GDP ratio increased on average in 2025 (after the post-pandemic decline), although remaining below the 2020 peak. At the same time, several Member States continue to exhibit debt ratios well above the EU average. Outside the EU, the largest fiscal imbalances among advanced economies concern the US (with a public deficit projected at about 7.9% of GDP in 2026 and gross public debt at 128.7% of GDP) and Japan (where the debt-to-GDP and deficit-to-GDP ratios are expected at 226.8% and 2% in 2026, respectively). At the same time, the financial system is undergoing profound changes driven by technological innovation. Overall, current trends point to a rapid acceleration in the adoption of generative AI and to rising investments in quantum computing, two general-purpose technologies expected to serve as strategic levers for the future competitiveness of the financial system. However, in terms of investment, Europe appears to lag behind the US, which leads global investments in start-ups operating in the AI and quantum computing sectors. In this context, 2025 was also marked by pronounced instability in the cryptocurrency sector, with the market value of cryptocurrencies undergoing boom‑bust cycles, and stablecoins expanding rapidly – also thanks to a softening of regulatory stance recorded in some important jurisdictions, such as the US with the so-called the GENIUS Act – while raising financial‑stability concerns. These developments boost stablecoins prices (+55% in 2025), with a market value above $300 billion by October 2025 ($312 billion as of 22 January 2026), representing almost 10% of the total cryptocurrency market value. |
| Financial markets performances During 2025, financial markets delivered broadly positive price performances, reaching new record highs despite persistent geopolitical tensions. Across advanced economies, equity benchmarks posted solid double-digit gains: the S&P500 rose by 16.4%, the Nikkei225 surged by 26.2%, while the Ftse100 and EuroStoxx50 increased by 21.5% and 18.3%, respectively. Among the main European markets, the Ftse Mib advanced by 31.5%, its strongest performance in more than twenty years, although it remains below its historical peak set in 2000 (–11%). Since 2015, Ftse Mib has gained approximately 110%, compared with 128% for Germany’s Dax30, 76% for France’s Cac40, 81% for Spain’s Ibex35, and 76% for the EuroStoxx50. ... more |
| Focusing on the Italian stock market, similarly to Ftse Mib, the indices representing smaller-cap companies also exhibited a notable increase: the Ftse Italy Small Cap and the Ftse Italy Mid Cap rose by 30.2% and 23.2%, while the Ftse Italy STAR and the Ftse Italy Growth posted weaker gains (10.2% and 9%, respectively). A more in-depth analysis of the Italian and European reference indices Ftse Mib and EuroStoxx50 can provide additional insights. Indeed, when the index constituents are grouped by sector, financial companies stand out with the highest average price performance (70% in Italy and 65% in Europe). However, it should be noted that financial companies account for approximately 45% of the Ftse Mib index, which is more than double the proportion represented by financial sector in the EuroStoxx50 (21%). Consequently, the Ftse Mib exhibited a substantial outperformance in comparison to its European peer over the course of the year. It is estimated that the financial sector contributed approximately 72% to the annual performance of the Ftse Mib, in comparison with 48% for the EuroStoxx50. Despite its positive performance, the Ftse Mib continued to show slightly higher volatility than the broader euro area, and the Italian equity market remains characterised by an elevated equity risk premium (ERP), persistently above its long-term average throughout 2025. In this context, structural features of the Italian market – particularly liquidity – remain subdued. In 2025, liquidity has declined compared with 2015 data: on EXM, the turnover ratio fell from nearly 100% to 88%, while on EGM it declined from 25% to 22%. Both markets are highly concentrated. In addition, concentration on EXM increased, with the share of market capitalisation of top ten companies at 55% in 2025 compared with 37% in 2015. Shifting the focus to government bonds, during 2025, 10-year yields across selected advanced countries have remained broadly aligned with levels observed prior to the most recent policy rate cuts by the US, UK, and euro area central banks. The 10-year BTP-Bund spread had reached at year-end 65 basis points (minimum value since 2009), narrowing over the year by 47 basis points, due to the increase in the Bund yield. |
| Capital markets development In Italy, the reliance on capital markets for financing purposes by non-financial companies remains limited. In 2025, the market-funding ratio (computed as the ratio of listed shares and bonds to the sum of these instruments and bank debt), that is an indicator of the intensity of market financing for companies, stood at 34% in Italy, a value lower than the EU average (37%) and significantly lower than levels observed in the US and the UK (74% and 57% respectively). ... more |
| Moreover, the equity market in Italy keeps showing a size not comparable to the size of the overall economy: the Italian equity market capitalisation accounts for only 0.8% of global market capitalisation despite Italian GDP representing over 2% of global GDP. At the end of 2025, the Italian market‑cap‑to‑GDP ratio stands at 48%, among the lowest in advanced economies. Measures to foster the development of capital markets – both regulatory and non-regulatory – cannot be postponed. In fact, Italy has considerable untapped potential in market-based financing, underpinned by households’ substantial stock of financial assets, standing at €6,148 billion in mid-2025. However, the incidence of insurance and pension products in household portfolio of financial assets is 19%, a value significantly lower than the euro area (27%) and the US (28%). This means a comparatively smaller pool of long-term and professionally managed household savings and a thinner demand base for equities and corporate debt instruments. The asset management industry appears to be underdeveloped in comparison to both households’ wealth and the size of the economy. The assets managed by domestic operators amount to approximately 70% of GDP, which is considerably lower than the ratio recorded in other major European countries, both outside the EU (for example, Switzerland and the UK, with ratios of 424% and 349%, respectively) and within the EU, where the Netherlands and France record values close to 187% and 181%. The pension fund sector also remains modest in scale, with Italian funds' net assets accounting for approximately 9% of GDP. This figure is higher than in Germany and France, but significantly lower than in the Netherlands and Sweden. Furthermore, despite significant growth of the sector in Italy, investments in domestic equities remain modest, accounting for 7% of total assets for the Italian asset management industry and 1.9% for Italian pension funds. Even Individual Savings Plans (PIRs), designed to support the allocation of private savings to Italian companies, remain small in relation to household wealth (with assets under management of €25.5 billion in September 2025) and display limited exposure to listed Italian SMEs (7.8% of assets under management). An analysis of the ownership structure of Italian companies listed on Euronext Milan (EXM) indicates that, despite the proportion of asset managers in the capital has increased over the last decade (from 32% to 41%), in 2025 the contribution of domestic managers remains limited (12% of the share held by asset managers). By contrast, the share of institutional investors (pension funds, insurance companies, sovereign wealth funds, foundations and endowments) has remained largely unchanged over the period, at around 10%. Data show that only 20% of total pension funds investing in Italian listed companies refers to Italian operators. Private equity and private debt have become key components of capital markets, complementing public markets by providing patient resources, active ownership, and strategic support. Global, European and domestic private equity (PE) fundraising activity slowed significantly in 2025, both in terms of amounts raised and number of funds after almost a decade of strong growth. Global PE deal activity, however, kept growing for a second year in a row in 2025, both in terms of amounts invested and number of deals. According to AIFI data, in Italy the overall sector – PE, venture capital and infrastructure investments deal activity – increased in the first half of 2025, both in terms of amounts invested (+17% standing at €5.2 billion) and number of deals (+24%) in comparison with the first half of 2024. |
| Primary markets trends The need to pursue the goal of developing the capital market is evident when observing the dynamics on the equity primary markets. In fact, although at the end of 2025 the capitalisation of Italian stock markets reached an all-time high of €1,077 billion, this result is mainly attributable to the prolonged positive performance of secondary markets. Since the end of 2010, price increases have contributed approximately €748 billion to total capitalisation (price effect), while primary market dynamics have been negative (-€96 billion), with a capitalisation related to new listings (€91 billion) lower than that lost as a result of delistings (€187 billion). This trend intensified over the past five years, with a net loss of €72 billion. ... more |
| Against a backdrop of sustained but essentially stable delisting, the decline in IPOs has been the main factor behind the fall in the number of companies listed on EXM from 277 to 198 since the end of 2010. However, such decline is a trend common to the main international markets: over the last decade, the London and Paris markets have seen a reduction in the number of companies listed on the regulated market of 20% and 46% respectively, compared with a 20% decline in Italy. On the Italian SME growth market EGM the worsening balance has been primarily explained by a surge in delistings. The translisting phenomenon has declined significantly in the last two years, compared to its peak in 2018-2023, with only one unit in 2024 and zero in 2025. Over 2005-2025 period, total IPO proceeds on EXM amounted to €34 billion, with 21% coming from primary offerings, while on EGM they reached €7.3 billion, of which 81% came from primary shares. The difference suggests a clear feature of the EXM, where the decision to go public is often driven by shareholders’ search for liquidity rather than companies’ funding needs. The market intermediation indicator – measuring net financial flows channelled by the Italian stock market to and from companies and investors – has remained negative throughout for the past 19 years. Since 2007, investors have received a total of €457.4 billion in dividends and €87.9 billion through share buy-backs, with a marked acceleration in the last five years. Overall, these findings indicate that the stock market has operated primarily as a channel for redistributing value to investors rather than as a source of financing for companies. Over the past ten years, Italian companies (and shareholders) have received almost three times more resources from private equity than in proceeds from all IPOs on the EXM and EGM combined. Taking follow-on transactions into account, the resources provided by private equity and the stock market over the decade are broadly equivalent. Analysing private versus public markets solely from the perspective of corporate financing captures only part of the picture. Public markets not only provide direct funding to firms but also offer households liquid and accessible investment opportunities. While private markets can serve as a viable alternative for corporate financing, as recent evidence have shown, private equity cannot replace the standardised, transparent, and easily tradable instruments available in public markets. Efforts to bring private market instruments to retail investors – the so-called ‘democratisation’ or retailisation of private markets – have therefore raised concerns and attracted scrutiny from regulators worldwide, given the complexity, illiquidity, and risk profile of these products. On bond markets, public-sector debt issuance was substantial over the year. The US issued government securities equivalent to 36% of the total outstanding stock, with almost 60% concentrated in short-term maturities. In Europe, Italy and Germany continued to be the two largest issuers, with volumes close to €450 billion each. Among the main Eurozone economies, Germany and Italy show the lowest share of issues of short-term securities (respectively, 22% and 30% of the total 2025 issuance). The risks associated with refinancing are pronounced for the US debt, as the bonds maturing by the end of 2026 account for more than 30% of the total outstanding bonds. This figure ranges between 8% and 15% for the main European countries. As for the private sector, financial corporate bond issuance remained close to the peak levels observed in 2024 while non-financial bond issuance slightly declined. In both sectors, issuances remained well above the 2015-2024 annual average sustained by reference rates cuts occurred during the year. Focusing on Italy, in 2025 corporate bonds issued and listed on Italian trading venues accounts for more than 14% of the total amount issued against a 10-year average of 3.5%. |
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 Antonella Mele to the development of the analyses reported in Sections 1 and 4, and of Giorgia Simone to the development of the analyses reported in Sections 3 and 4.
The opinions expressed in the Report are the authors' personal views and are in no way binding on Consob.