"Made in Italy": not only food, fashion and cars - Freedom Finance interview in Italy

Italy is still a country with a high level of public debt, and the government has to find a balance between fiscal discipline and support measures. The country's modern economy is not only fashion, cuisine and "Made in Italy" cars, but also a market with new points of growth. In an interview with Oninvest, Francesco Bergamini, head of Freedom Finance's Italian office, told us which sectors and large companies look promising and why investors should pay attention to the shares of Italian small-caps.

What is the current state of the Italian economy? What about the main indicators, what are the forecasts for the coming years?

- The Italian economy is in a difficult situation today, but there are encouraging prospects. The macroeconomy has entered a more stable development trajectory: the Ma of Italy estimates that GDP will grow by 0.6% in 2025, 0.8% in 2026 and 0.7% in 2027. This is a gradual but positive path, supported by the recovery of domestic consumption and the acceleration of public investment linked to the PNRR (National Recovery and Sustainability Plan, with a focus on digitalization, green energy and infrastructure).

Inflation fell to 1.6% in August 2025, bringing Italy back within the ECB's target benchmark. The unemployment rate has fallen to 6%, its lowest level in 15 years. Thanks largely to the good dynamics of high-tech manufacturing and the sustainability of tourism - the country is changing, becoming more competitive and attractive.

Italy remains one of the most indebted countries in the EU with a public debt above 130% of GDP. What measures is the government taking to control debt levels?

- Public debt remains a key issue. The government's strategy is built on a combination of spending review, rationalization of tax incentives, revenue increases and an ambitious privatization program expected to generate up to €20 billion by 2026.

In 2024, the budget deficit stopped at 3.4% of GDP - well below the government's target of 3.8%. It is expected that a favorable evolution of public finances could bring the deficit back below the EU's 3% threshold as early as this year - twelve months ahead of plan. The Giorgia Meloni government insists on the need to shape the long-term horizon through program documents such as the Structural Budget Plan (Piano Strutturale di Bilancio).

The combination of greater political stability and progress in public finances has raised analysts' optimism: in late September, Fitch upgraded Italy's sovereign credit rating to BBB+ with a stable outlook. The rating upgrade is symbolically significant - it ended a decade-long period during which the country was considered a "weak link" in the eurozone.

How do government efforts affect the investment climate in Italy? Which sectors of the economy are benefiting the most?

- The improved rating helped lower the spread on BTP Treasuries to German Bunds (10-year German Bunds) and boosted international investor confidence. Utilities, infrastructure and sectors related to the energy transition benefited the most.

In particular, Enel, Terna and Snam are investing heavily in smart grids, storage and renewable energy, while Prysmian is leading the global race to produce high-voltage submarine cables. Chip maker STMicroelectronics is building a new €5 billion plant in Catania to produce silicon carbide, a key material for semiconductors.

Since the start of 2025, the FTSE MIB index of Italian equities is up about 26% versus a 12% gain for the STOXX Europe 600. The rally was mainly supported by the banking sector - particularly Intesa Sanpaolo and UniCredit- as well as the defense, energy and luxury goods sectors.

How are Italian companies affected by US President Donald Trump's trade policies?

- The US trade policy poses a direct threat to Italian companies: the imposition of new duties, which will average 15%, could seriously hit key "Made in Italy" sectors. These are agri-food, fashion, precision engineering. Wine, olive oil, clothing and footwear risk losing competitiveness in a market where they already have to compete with more affordable alternatives. Automobile and component manufacturers, the backbone of Italian exports, are vulnerable: duties reduce margins and force companies to reconsider their international development plans.

The situation is more complicated in the steel and chemical-pharmaceutical sectors, where there are both barriers in the form of duties and the indirect effect of sanctions and restrictions on exports to countries that are subject to US sanctions or trade restrictions. Confindustria estimates that a harsh scenario jeopardizes Italy's exports of up to €20 billion, corresponding to almost 1% of GDP.

What drivers will drive Italian equities in the coming years?

- In the short term, investors' attention is focused on the European Central Bank: a signal of rate cuts could give further impetus to Italian indices, which have already received support from a recent Fitch rating upgrade and strong corporate reports.

In the medium term, the key factor will be the implementation of the PNRR plan. The efficient use of European funds in infrastructure, digitalization and green projects will determine the competitiveness of the manufacturing sector. At the same time, innovative and export-oriented companies should diversify markets and supply chains to cope with geopolitical risks and possible new US duties.

Which sectors of the Italian economy today, in your opinion, are the most interesting for investment?

- The first, without a doubt, is the banking sector. After several difficult years, Italian banks have regained momentum, supported by high interest rates, generous dividend and share buyback programs.

Another important sector is energy, especially in its "green" version. Italy is among the European countries that are most actively pushing the direction of ecological transformation, with projects ranging from renewable energy to smart grids. The infrastructure sector also promises to play a decisive role in the economy in the coming years.

The luxury sector continues to be attractive: Italian brands are still perceived as a solid investment point.

The geopolitical situation has brought the defense and aerospace industries to the forefront. In addition, it is worth paying attention to the technology sector, which is still less developed compared to other countries, but is at a stage of growth.

What innovations are most visible in Italy, which companies should investors pay attention to?

- When we talk about Italy, most often we think of fashion, design or Italian cuisine. However, a new map of trends is gradually emerging that could become an equally important part of the national identity. Artificial Intelligence, biotechnology, robotics and green energy are four areas that have seen a significant increase in investment in recent years, accumulation of competencies and the emergence of companies capable of making a name for themselves outside the country. For investors, this is an opportunity to bet on structural changes in the Italian economy.

The field of AI is rather distinguished by the application of technology than by the production of hardware. Small and medium-sized companies like ExpertAi SpA, specialized in computational linguistics, or Almawave, working on speech recognition and generative AI solutions, have managed to attract corporate and institutional customers. Large integrators like Reply and distributors like SeSa are incorporating these technologies into the business processes of Italian companies.

Biotechnology has already become one of Italy's traditional specialties. DiaSorin is a world leader in diagnostics with a product portfolio that has long gone beyond covid tests. Pharma company Recordati focuses on the treatment of rare diseases, a cycle-resistant niche. Philogen is developing innovative anti-cancer therapies.

Robotics and industrial automation is another significant industry. Interesting companies include TXT e-Solutions, working on software for aerospace and defense, Antares Vision, specializing in machine vision and drug tracking systems. These businesses are benefiting from global trends - the return of manufacturing to countries of origin and the development of "smart factories".

In the field of green energy, Italy boasts world-class champions: Enel, one of the global leaders in renewable energy, ERG, a pioneer in wind energy. There are also young players - Alerion Clean Power and Energy S.p.A., focused on solar generation and energy storage systems. In parallel, infrastructure giants like Terna and Snam are investing billions in new grids, submarine cables and hydrogen projects, ensuring a faster and safer energy transformation.

Which Italy-focused ETFs might be of interest to investors?

- Those who want exposure to the Italian stock market without picking individual stocks should look at the three main ETFs:

The Amundi FTSE MIB UCITS ETF follows the Borsa Italiana Index and provides exposure to major companies - such as Enel, Intesa Sanpaolo, Ferrari and Moncler - at low costs - with a Total Expense Ratio (TER) of 0.35%.

The iShares MSCI Italy, traded in New York, covers about 85% of Piazza Affari's capitalization. It is highly liquid and accessible to foreign investors, although there is dollar/euro currency risk.

The Lyxor FTSE Italia Mid Cap ETF focuses on mid-sized companies: more dynamic and diversified, less known to international investors but often with higher growth potential.

Which Italian small-cap companies are the most interesting for investors?

- Italian small-caps are more often family-owned companies, innovative, with a strong local base and able to carve out niches in international markets. The government encourages digitalization and green energy, with exports remaining a key driver. Some of the most interesting names are TXT e-Solutions, Alerion Clean Power and biotech Philogen, which I have already mentioned, and Antares Vision, which specializes in tracking systems.

What is happening in the initial public offering (IPO) market? Which upcoming IPOs should investors pay attention to?

- Today, it is no longer enough to have a strong operating history: investors want to see scalable business models, predictable cash flows and sound corporate governance. There are fewer successful IPOs, but they tend to be larger and better structured. In Italy, many companies prefer a staged route: first they go on Euronext Growth Milan (a simplified listing exchange for small and medium-sized companies - Oninvest), which serves as a kind of springboard - successful companies eventually move to the main market (Euronext Milan). Among them: Altea Green Power, Smart Capital and Edgelab.

Among the most anticipated deals is the IPO of luxury sneaker maker Golden Goose, which was looking at a valuation of around €2 billion in Milan. The IPO was postponed due to market conditions, but remains an important event and has the potential to regain the attention of international investors.

This article was AI-translated and verified by a human editor