Italy's referendum on constitutional reform on Sunday (December 4) may also be different from Britain's decision to withdraw from the European Union and Trump's victory in the US presidential election, because the result of the Italian referendum will not be unexpected, but the reaction of financial markets may be worse than expected. So what is the impact of Italy's exit from Europe?
Italian Prime Minister Matteo Renzi's constitutional reform plan to centralize power is sure to be rejected by Italian voters in a referendum on December 4. Renzi has said he would resign in the face of such an outcome.
The Impact of the Italian Referendum on China
Italy's exit from Europe has a direct impact on China's economy. Similarly, the analysis shows that the impact of Italy's exit from Europe on China's economy is not direct, but far-reaching. It is mainly reflected in two aspects:
First, whether it is the internationalization process of RMB or the transformation of China's economy, it is at a critical moment, and what is most needed is a stable external environment. The turbulent situation brought about by Italy's exit from Europe will threaten the transformation process and long-term development of China's economy to a certain extent.
The second is the most direct impact. Italy's exit from Europe will inevitably lead to the economic contraction of Italy and even the whole euro zone, and the trade with China will also be doomed, and China's export business will face an impact. Especially once the EU tends to adopt trade protection policies, it will seriously affect bilateral trade between China and Europe.
Gathering for the Italian referendum
If Italians vote "no" in the referendum on Sunday, it could trigger a political crisis and lead to a sell-off in the Italian stock market.
However, JPMorgan points out that if the Italian stock market falls habitually after the referendum, investors should take the opportunity to snap up Italian stocks at a low level. JPMorgan Chase pointed out that the Italian referendum was different from the US general election and the British referendum to withdraw from Europe, and the market was not surprised. Investors have slashed their exposure to Italian stocks.
At present, the risk of systemic collapse of European banks is increasing, and the scale of non-performing assets in Europe has reached a record level, with Italy being the most serious, reaching about 30%.
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