Wealth managers give their views on the result of the referendum on political reform in Italy at the weekend, seen as another sign of populist discontent across the developed world.

Italian voters opted by a 60-40 per cent margin to reject proposed reforms to the country’s political system. Italy’s prime minister, Matteo Renzi, offered his resignation. Renzi had sought constitutional changes, including reducing the power of the Italian senate in the two-chamber system, to make it easier to enact legislation and hence reforms to an Italian constitution brought into force in the aftermath of the Second World War. Advocates said changes were necessary to make reforms to Italy’s sclerotic economy and hence strengthen the eurozone (there have, for example, been widespread concerns about Italy’s weak banking industry). Opponents said they feared changes to a structure expressly designed to avoid a rise of authoritarian rule as suffered by Italy before WW2.

Inevitably, as the referendum on the Renzi proposals followed the UK’s Brexit vote on 23 June and Donald Trump's election victory in the US, the Italian poll was seen as another sign of rising political populism and distrust of conventional wisdom. It was also seen, at least in some quarters, as a blow to the European Union and the euro.

Here is a selection of views from wealth management firms.

Bill Papadakis, investment strategist, Lombard Odier
“While the collapse of an Italian government and even the risk of new elections would not normally be of significant concern to investors – who have, after all, experienced such events numerous times in the past – the timing of these developments is more critical this time around.”

Ruth van de Belt, investment strategist, and Roelof Salomons, senior strategist, Kempen Capital Management
“With the Italian ‘no’ we expect yields on Italian government bonds to rise further, but we assume that the ECB will intervene through its buying programme for government bonds if the Italian spreads diverge too far. Prices for riskier investment categories, such as equities, could be expected to undergo correction over the short term. In particular, the banking sector will be affected. The market prospects for the (medium to) long term are more difficult to forecast. Not only do the political and banking developments in Italy play a role, but so do the response function of the ECB and political developments in the rest of the eurozone.

“We are assuming for now that the Italian ‘no’ does not lead to a system crisis. The referendum result could however make it more difficult to achieve a solution for the Italian banking problem. For the problem banks, such as Monte dei Paschi di Sienna and Unicredit, it will become more difficult to raise the required amounts of capital in the market. However, the banking problem needs some qualification. It’s only a matter of a fraction of the Italian economy and of the overall Italian government debt.”

Eliezer Ben Zimra, fund manager, asset allocation and sovereign debt at Edmond de Rothschild
"Yesterday, Italy massively rejected Matteo Renzi’s referendum on constitutional change. But the wide margin in ‘no’ votes caused few upheavals on markets which decided to react rather moderately. True, the ‘no’ vote had been largely anticipated.

"And unlike previous weeks, spreads between Italian and German government bond yields were little changed following the news, widening by only 10 basis points. Risk remains limited to Italy and is far from being systemic. And the scenario of Italy quitting the eurozone has been ruled out: we see no signs of contagion, not even in Spain.

"Now that the referendum is over, the ECB will take centre stage this Thursday. The bank intends to take its role as watchdog very seriously and move to guarantee financial stability in Europe. That will probably mean an extension to the existing asset purchasing programme to September 2017 as it is too early to stop the accommodating monetary policy which has been in place for several months. Central banks are still not happy with current inflation and inflationary expectations. Extending quantitative easing should provide support for financials."

Patrice Gautry, chief economist, Union Bancaire Privée
"Italian growth recovery looks already fragile and its performance will probably continue to lag the eurozone. The outlook remains limited and GDP growth should stay below 1 per cent in 2017, as consumption stays moderate. Despite reforms in labour, unemployment rate is still high (11 per cent) and wage growth flat.

"The outlook on investment is limited and further support was expected (lower tax, incentives to innovate) from the former Renzi’s government. The political situation creates downside risks on activity in the coming quarters. Fiscal balance has improved, and deficit is expected to stabilise around 2.5 per cent of GDP in 2017, and public debt at 133 per cent. A primary budget surplus exists (around 1.5 per cent of GDP), but it looks too small to stop public debt to continue to rise. As growth remains stuck below 1 per cent, a strong rise in long-term interest rates will deteriorate further public financial situation and increase mechanically public debt."

David Simner, fixed income portfolio manager, Fidelity International 
“The rejection of the Italian constitutional reform at the weekend was already largely priced in by fixed income markets, as the initial market reaction this morning seems to confirm. At the time of writing, 10-year BTP yields are lower than where they opened on Friday morning, and the spread versus 10-year German Bunds is still far from the widest levels recorded in the last few weeks. There’s hardly any sense of ‘panic’ in the market.

“While Renzi’s resignation may come as a surprise at the margin, the chances of early elections remain slim at this point. The base case is that a caretaker government will be appointed in the next few days, something that Italy has already had experience with in the past.

“For Italian fixed income, the key date remains the ECB meeting this Thursday, 8 December, where we expect an extension of the QE programme by at least another six months after March 2017. The ongoing ECB support to European government bonds makes any meaningful widening in BTP spreads unlikely in our view, and a higher market uncertainty will support a dovish stance by the Governing Council. We would therefore see any sell-off in peripheral government bonds as a buying opportunity."

Tina Fordham, chief global political analyst, Citigroup
“Italy's 'no' means a new political risk front has opened for the EU in Italy, with early elections likely in 2017, in addition to elections in France, the Netherlands, Germany and possibly the UK as we have previously suggested. Among the many possible outcomes of this constellation of European political risks in the year ahead is to complicate the Brexit timeline, with EU officials likely to focus on avoiding further exits, and leaders facing elections concentrating on domestic considerations rather than negotiating the terms of a new deal between the EU and the UK.

“More broadly, the victory for anti-establishment forces in Italy, coming hard on the heels of Trump and Brexit, could well embolden other erstwhile political challengers to capitalise upon what increasingly appears to be a winning political formula. Supportive Tweets from Donald Trump, UKIP's Nigel Farage and the National Front's Marine Le Pen followed the no result in Italy, clearly making the link to their own brands of anti-establishment challenge. The relatively short-lived and muted financial market response to Brexit and Trump could paradoxically appear to lower the costs of casting a protest vote by failing to prompt volatility."