“The rush of inflation is not temporary, there are structural reasons for pushing prices up: we must pay attention to the impact this can have on markets and on growth”. Stéphane Boujnah, CEO of Euronext, the finance giant that also controls the Italian Stock Exchange and manages 25% of European trading, sees a 2022 recovery thanks to the tow of Recovery and the braking of Covid. He is not worried by the Italian political situation in the days of the election of the Head of State.
What will 2022 be for the markets?
“We are facing strong growth in Italy and in Europe, with the confidence that 2022 and 2023 will no longer be years of pandemic but of post-Covid and green transition. Certainly the critical issues are important: the exit from central bank stimuli, the uncertainty linked to inflation and interest rates. This explains much of the pressure on the markets, but at the moment I think growth is reassuring ».
ECB and Fed go in the opposite direction and Lagarde faces rifts within the ECB itself. Who is right? Will inflation return by 2022?
«Certainly the divergence between the Fed and the ECB, with at least three rate hikes expected in America this year and none in Europe, is very significant. Since much of inflation depends on energy, there is a very different perception depending on how much each one has to deal with. Both individually, between those who go to work by car or subway, and between different countries, depending on how much they can exploit alternative sources, from nuclear to renewables. And all this affects the debate within the institutions. A debate, the one on the temporary nature of inflation, destined to cross the whole of 2022, and to bring back issues of the 70s such as the indexation of wages to inflation. Forms of wage adjustments only make sense if the price rush is not transitory. And I believe it is only partly so ».
In what sense?
“Lagarde’s idea is that inflation depends on supply difficulties and raw materials, but I think there is a structural component linked to the ecological transition: until this transformation is over, we will have an impact on prices”.
With what effects on the stock exchanges?
«Any rate hikes will give banks the opportunity to improve margins and those who work in energy will also benefit. Those who cannot afford to pass on the impact of inflation to their customers will suffer. But I expect the growth will continue ».
Is the recovery working?
«Yes, throughout Europe, albeit with some differences between the various countries: it is proving to be an extraordinary tool for accelerating reforms and shortening the distance between countries of the North and the South in Europe. It is one of the major successes of the Union since the beginning of the century. This should encourage Europe to push for the other reforms it needs. ‘
What are you referring to?
«We need to accelerate the banking and financial integration programs, to create a competitive European market on the global stage. The Commission and governments must have the competitiveness of the whole system as a priority: sometimes we write brilliant and intelligent rules, but with the effect of creating opportunities for new players arriving from outside on European markets to make Europe a consumer market more than producers. And in most cases without reciprocity conditions for European companies. Therefore, it is good to promote internal competition and be open to innovation, but careful to defend the competitiveness of European companies, to guarantee autonomy in strategic sectors ».
Would the “Italy risk” return without Draghi?
«We never enter into the debate of the normal democratic life of the nine European countries in which we operate. What I can say is that I see from Italy a great job in the right direction, of reforms and growth, already started with the previous governments and I imagine it will last also with the next ones. I do not pay attention to the surface of political life, because I believe that there is a more important framework than the single individuals who hold offices: both institutional and economic fundamentals. Italy has a very strong business and financial community, with high-quality professionals, a high savings rate for companies and families, a path of reforms that can encourage investments “.
How are your plans for Borsa Italiana progressing?
“We are excited about how the integration into the group is progressing, thanks to the excellent work of CEO Fabrizio Testa who is bringing Borsa Italiana to the center of the financial markets like never before: all transactions in the Italian market will soon be part of the most important platform European. 2022 will be a key year: in June we will proceed with the transfer from London to Bergamo of our Core Data Center, the infrastructure on which 25% of European equity exchanges pass. Then between next year and 2024 we will favor the migration of all clearing activities to Rome, within Euronext Clearing, while we have ambitious plans to grow MTS outside Italy “.