Get the Latest Market Insights with the MIB 40 Index

Instrument description

Italy is one of the most famous country of Europe, and its stock exchange is called Milan Stock Exchange also known in Italian as the Borsa Italiana. The Milan Stock Exchange is located in the city of Milan and the only exchange in Italy. The FTSE MIB 40 Index is the benchmark index that represents 40 of the largest companies that actively trade on the Milan Stock Exchange. The 40 companies in the list are based on the Industry Classification Benchmark (ICB) across various sectors of the market.

Italy 40 or MIB 40 is also commonly referred to as FTSE MIB, where FTSE stands for Financial Times Stock Exchange. The MIB 40 index was introduced in 1997, and before June 2009, the index was maintained by Standard & Poor and was called S&P MIB. But today, the Borsa Italiana is owned and maintained by the London Stock Exchange Group that is also the parent company of FTSE.

History of MIB 40 Index

The Milan Stock Exchange (Borsa di Commercio) was formed by Eugene de Beauharnais in January 1808. The Milan Stock Exchange was publicly owned but became privatized in 1998. The Milan Stock Exchange was taken over by the London Stock Exchange and merged with the FTSE. The MIB 40 Index is denominated in Euros as Italy is not only a member of the European Union (EU) but also part of the Eurozone.

The Italian stock market was based on the market performance of the top 30 companies that traded on the Milan Stock Exchange and called MIB 30. Later the index was called MIB 40 when the index was managed by S&P and called S&P/MIB, but since 2009 it is known as FTSE MIB Index.

The MIB 40 Index has seen many fluctuations in the last ten years but traded quite actively from 2005 to 2007 and reached a high value of 43,755 points. The MIB 40 Index was badly impacted by the financial crisis in Europe in 2008. Apart from Italy’s domestic economic health, global events also cause upward and a downward trends in the MIB 40.

The MIB 40 Index is reviewed after every quarter in March, June, September, and December by the FTSE Italia Index Series Technical Committee. The 40 largest companies are included and removed from the list based on their market capitalization and trading volume of the last 6 months. The companies are listed according to the Industry Classification Benchmark (ICB) criteria and capped at 15% to avoid the dominance of any particular company on the index value.

The MIB 40 represents almost 80% of the market capitalization of domestic companies that do business in Italy. Some of the popular companies trading in the MIB 40 Index include Ferrari, Pirelli, Salvatore Ferragamo, Fiat Chrysler Automobile, Campari, Leonardo, Exor, Intesa Sanpaolo, Moncler, Atlantia, Luxottica, Telecom Italia, Tenaris, and Enel.

The current base value of the MIB 40 Index is set at 24401 on December 21, 1997. The all-time high value of the MIB 40 Index was 50108.56 points in March 2000, and the all-time lowest value was 12362.50 in July 2012.

How the value of MIB 40 is calculated

The MIB 40 Index is a free-float market-capitalization-weighted. The value of a free-floating index is measured by the share price and the number of shares available for the public to trade. A full market capitalization-weighted includes all the outstanding shares, while in free-float market capitalization, only the shares offered for trading are considered. The MIB 40 Index is similar to the Dax 40 when it comes to calculating the market capitalization of the index.

The market capitalization of the MIB 40 Index is nearly close to €2.4 Trillion. As the MIB 40 Index is a free float-adjusted market-cap index, it means the bigger companies have a higher percentage weightage and more impact on the value of the index as compared to the smaller companies who have lower percentage weights.

How to read the price change in MIB 40

The MIB 40 Index attracts traders and investors due to the trading of highly liquid stocks and volatility. The MIB 40 Index sees a wide volume of trading and consistent market swings that provide an opportunity for day traders to speculate and benifit from the short term price movements. The shares of the 40 companies are valued in Euro, and the value is calculated in real-time during the trading hours in the Borsa Italiana.

When we analyze the MIB 40 Index chart, we notice the Index trades in a stable way and from the range of 20000.00 to 26000.00 points from July 2019 to mid-February 2020. The MIB 40 Index also reached the in February when the index touched 25544.73 on February 19, 2020. There is a sudden Bearish trend since the last week of February, and the MIB 40 Index reached the lowest value of 14845.92 on March 12, 2020. Since March, the MIB 40 Index is still trying to gain momentum but see considerable swings; the index trades at 20074.98 EUR. The Bid price is 20090, while the Ask price is 20080.

How to trade in MIB 40

The 40 companies in the MIB 40 Index are listed on the Borsa Italiana and open for trading from Monday to Friday. The trading hours of the MIB 40 Index are from 09:00 to 17.30 (GMT+ 1 Hour). The MIB 40 Index appeals to both traders and investors due to its wide trading volume, volatility, and long trading hours.

One way to trade in the MIB 40 Index is through Contract for Difference (CFD), which is a derivative contract between a trader and a broker. The trader tries to gain by speculating from the price difference from the opening of the trade to its closing. The trader has the option of using leverage while trading and trading in both directions.

Using leverage means having wide market exposure and the ability to trade a large position by depositing a small initial amount. Trading in both directions means a trader can speculate on both Bullish and Bearish trends. A trader can go Long while predicting an upward trend and go Short when speculating a downward trend. Trading CFDs give an opportunity to magnify the profits, but there are equal chances of losses, so a risk management tool must be used to avoid financial losses.

What causes the price change of MIB 40?

The macro-economic factors and individual performance of the listed companies play a crucial role in determining the value of the MIB 40 Index. The share price of a company matters along with the economic growth and stability of Italy. When the domestic politics, regional politics, and weather patterns are calm, then the MIB 40 Index will perform well, and in economic crisis and political instability, the MIB 40 Index tend to lose points and see a Bearish trend.

Like other global indices, as MIB 40 Index is market capitalization index so the performance of the companies impacts the overall value of the index. The interest rates from the European Central Bank (ECB), trade agreements, and fluctuation of oil prices also influence the MIB 40 Index. Apart from the consistent day to day fluctuations, the MIB 40 Index attracts the traders as the index trades in highly liquid stocks, the index is easy to predict, and information about the index is readily available.