23 November 2020

Piazza Affari boasts a series of stocks directly or indirectly involved in the energy transition. Stocks not only attributable to utilities, but also to large, medium and small enterprises that operate in sectors other than energy. Many of these companies, after wavering before investment in innovation, can finally attempt to bridge the gap formed over the years. By decisively taking the path of innovation, and thanks to their singular expertise, they could again become competitive, bolstered by a business that could become more sustainable.

“The underlying trend remains the one seen in recent months and that will probably last 15-20 years: a scenario made up of firms that are perhaps even obligated to invest in technology and continue to allocate resources to research and development, and others that are instead more hesitant but risk being overtaken in their business model”, comments Massimo Trabattoni, Head of Italian Equity.

Excelling in this context are small and medium listed and non-listed companies with a more flexible nature and marked ability to adapt, which have been capable of gaining increasingly more relevant market shares in the field.

For all other companies, the biggest challenge is to intercept the change by avoiding investments that already appear obsolete, especially from a sustainable perspective.

“Not everyone knows that Italy is very strong in packaging”, recounts the Head of Italian Equity, “where Italy is a global leader, as well as in pharmaceuticals, especially as quality suppliers for major international health companies. Furthermore, in the automotive parts supply chain, despite the continuous drop in production in Italy in the automotive sector, there are specialised companies that supply major international automotive industries”, continues Trabattoni. “The Italian taste for luxury and food, however, is well known”.

What does this all mean? That Italy has always been able to develop innovative ideas and foster brilliant start-ups, but very often finds it difficult to support these projects, which in many cases require huge investment. For example, we need only think of the issue of storage for exportation in the foodstuff sector, which requires a massive effort in terms of financial resources.

The capacity for innovation, also thanks to the high quality standards of Italian universities (there are innumerable inventions where at least one Italian name is involved) is therefore a constant, but what is often lacking is the financial support for this aptitude for innovation.

“Traditional mutual investment funds certainly cannot be the right vehicle to transfer resources to the real economy because they do not reflect a medium-term time frame. Patient capital is essential. It must accompany the entire growth phase of the project, allowing for its full development in order to capitalise on the idea as much as possible”, specifies Trabattoni, who underlines how losing valuable time searching for capital means wasting the competitive advantage.

In any case, by matching the opportunities seen in the various sectors and the ability to seize them successfully, “the glass is half full”. This is also because in terms of revaluation, part of the market has made its best effort in recent years (and this is not only true for Piazza Affari), whereas another part is starting to benefit from all these changes, but does not incorporate the full potential into current valuations.

Today, Italy is called upon to confirm its high quality standard in manufacturing as the best supplier of major global groups and holds all the credentials to do so”, concludes the Head of Italian Equity.

Interview with Massimo Trabattoni, Head of Italian Equity.