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Feb. 21, 2007, 4:28 p.m. EST

Italian ADRs sell off after Italian premier resigns

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By Polya Lesova, MarketWatch

NEW YORK (MarketWatch) -- Shares of U.S.-listed Italian companies sold off on Wednesday, after Prime Minister Romano Prodi resigned, having lost a key Senate vote on the refinancing of Italy's military deployment in Afghanistan.

The Bank of New York Italy ADR Index fell 0.9% at 198.53 points. The iShares MSCI Italy Index Fund /zigman2/quotes/207981587/composite EWI +0.23% , an exchange-traded fund that tracks the performance of the Italian market, declined 0.6% to $33.87.

Italian President Giorgio Napolitano accepted Prodi's resignation and his office said talks to see who had the support to put together a new government would begin on Thursday, the Associated Press reported. Aides to Prodi didn't rule out that Napolitano would ask Prodi to try to form a new government, the AP said.

Earlier on Wednesday, Prodi lost a motion in the Senate over the government's plan to re-finance Italy's military deployment in Afghanistan and to expand an American airbase in northern Italy. There are 1,800 Italian troops in Afghanistan, sent there by the previous government of Silvio Berlusconi.

"Prodi has already been operating in very tight political constraints," said Jon Levy, an analyst at the Eurasia Group. His resignation is a "net negative," but it's too early to quantify the political fallout, Levy said.

Prodi, who won a closely-contested election last April, was leading a nine-party coalition, which was weak even before Wednesday's defeat in the Senate. Coalition partners range from Christian Democrats to Communists.

A former president of the European Commission, Prodi has generally followed prudent fiscal reforms and showed willingness to comply with requirements of the European Union's Growth and Stability Pact, Levy said.

The political spectrum in Italy is very fragmented. Italy has had more than 50 different governments since the end of the Second World War.

"It's hard to tell what would come out [of the upcoming negotiations to form a new government] since the structure of the electoral system is so complex," Levy said. "Berlusconi remains at the center of the opposition, but has lost a great deal of his political capital."

The news of Prodi's resignation weighed on shares of Italian companies listed in the U.S.

Semiconductor company STMicroelectronics /zigman2/quotes/207734906/composite STM +2.36% fell 1.3% at $19.14.

Telecom Italia was last down 1.7% at $31.14, Carmaker Fiat fell 1.8% at $23.98, and Utility Enel lost 1.1% at $54.07.

Ducati Motor Holding , a manufacturer of performance motorcycles, fell 2% to $14.60.

Italian eyewear maker Luxottica was down 0.4% at $31.41.

Oil giant Eni Group /zigman2/quotes/200785836/composite E -1.03% slipped 0.2% at $63.10 and Natuzzi /zigman2/quotes/206283720/composite NTZ +2.42% dropped 3.3% at $8.60.

US : U.S.: NYSE Arca
$ 30.00
+0.07 +0.23%
Volume: 211,540
Jan. 27, 2023 4:00p
$ 47.79
+1.10 +2.36%
Volume: 6.02M
Jan. 27, 2023 4:00p
P/E Ratio
Dividend Yield
Market Cap
$42.99 billion
Rev. per Employee
$ 30.87
-0.32 -1.03%
Volume: 283,601
Jan. 27, 2023 4:10p
P/E Ratio
Dividend Yield
Market Cap
$54.82 billion
Rev. per Employee
$ 7.89
+0.19 +2.42%
Volume: 1,201
Jan. 26, 2023 4:10p
P/E Ratio
Dividend Yield
Market Cap
$86.52 million
Rev. per Employee

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