Italian assets cheapest since Mussolini era, says BlackRock

Italian assets are the cheapest in Europe, and Italian equities currently have the cheapest valuation since the Mussolini era, according to Alice Gaskell, co-manager of BlackRock’s continental European Income Fund.

Speaking today at a press event, Gaskell said Italian equities offer an attractive valuation as well as good yield.

BlackRock’s continental European fund has a 10% exposure to Italian assets, with stocks selected according to stable revenue and credit rating criteria.

“Italy is very different from Spain, Portugal and Greece. The market is not exposed to the real estate bubble and has one of the smallest fiscal deficits in the world. Moreover, the situation has not changed since the country joined the eurozone. The outlook is stable and it is an attractive place to invest in the medium term,” Gaskell said.

As an example, the portfolio invests in Atlantia, an Italian holding company whose primary asset is Autostrade per l’Italia, the Italian road network.

The company is part of BlackRock’s ‘European infrastructure’ 2012 theme, and it has a BBB+ credit rating, with a long term dividend growth objective between 5 and 10%.

“Atlantia is owned by the Benetton family. It has a strong track record in paying dividends and it still has investment grade,” the manager said.

More in general, despite the ongoing crisis in the eurozone, European equity income offers yield plus growth plus strong balance sheet, according to BlackRock.

“Not only does Europe offer a higly attractive divident yield, but more than 75% of the holdings in our portfolio have actually increased dividend payments in 2011,” she said.

According to Gaskell, the two areas of the European market that are offering attractive dividend opportunities are companies with high and sustainable dividend, for example in the telecom, energy and infrastructure sectors, and quality companies with a dividend yield below the market average and dividend growth prospects due to their strong business models, ability to gain market share and international growth.

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