Eighteen months of war prices on the Italian stock exchanges

«The Economist», 22 gennaio 1916, p. 130

North Italy, January 11

Although public attention is focussed on the new war loan, which, with interest at 5 per cent, and issued at 97.50, gives a net yield of 5.20 per cent., the market is by no means flat. The bourses, indeed, are closed, but at private meetings stocks and shares are freely dealt in. For several months past dealings have been very active, and prices keep up wonderfully well. Some sample quotations may be given. The first table refers to State issues:

The fall of the 3 1/2 per cent. rente was perhaps natural, as the rate of capitalisation in the market was raised by the issue of the two 4.50 per cent, war loans and of the new 5 per cent. At the present price the 3.50 per cent. Rente yield about 4.25 per cent., which is explained by the very good classement of the 8 billions lire of nominal capital, of which over 4 billions are inscribed to the name of the creditors, and the rest is in possession of public saving institutions, and of several hundred thousands of bearers. The 4 1/2 per cent, war loans are below the issue price, owing to the pressure of the new 5 per cent, at 97.50; but the first (January) loan can be converted in the new 5 per cent, with the payment of 5 lire, and the second (July) also with a payment of 2.50 lire. The principal banking shares were priced as follows:

The recent rise of banking shares, after the first war slump, is very remarkable. The Bank of Italy shares are higher than on the days immediately preceding the war, which is easy to explain, owing to the large profits made by the banks of issue with an enlarged note circulation. Of the profits over 6 per cent, on the capital 50 per cent, will go, as usual, to the Treasury, and the remaining 50 per cent, will be severely hit by the new progressive excess profit tax. The Bank of Rome shares are low, owing to a capital reduction, which is, however, unconnected with the present war.

A group which has largely benefited by the war is that of sugar, navigation, iron and steel, motor-car companies. Here are a few specimen prices:

A most remarkable rise happened in the Fiat shares. The Fiat Company, which is directed by men of conspicuous ability, are the world-wide producers of motor-cars. They converted themselves into manufacturers of aircraft, war munitions, &c, and provide the Italian Government, in addition to motor-cars, with many other necessities for the conduct of the war.

I will quote also some other figures, in which the effects of the war were indifferently felt:

The Beni Stabili and the Imprese Fondiarie are two house-building and house-holding companies in Rome. The Meridional of Italy Railways is today, after the nationalisation of railways, a holding company; the two Genoese companies are representatives of public utility enterprises; the Acqueduct of the Pouille is a non-dividend-paying company, which will have a future when the great acqueduct in the Pouille region has been completed. All these companies’ shares felt, in a greater or less degree, the pressure of the highest capitalisation rate. But it is easy to see from the quotation given above the market situation is today far healthier than when the war broke out. The Stock Exchange carry-over is notably diminished; and the Stock Exchanges could be reopened without any price disturbance.