Monday January 18 was a black day on Lisbon’s stock market as foreign investors voted with their feet over how they feel about keeping their money in Portugal.
A third of businesses quoted on Lisbon’s Euronext registered losses yesterday of over 5%, with the PSI 20 index culminating in a fall of 3.71%.
As one economist explained: “After the cases of BES and PT in 2014, the resolution of Banif and the loss determined for senior bondholders at Novo Banco” there is every reason for investors to head for the hills.
“I think we are under a sales pressure from international investors who have decided to abandon the Portuguese market after successive cases,” Paulo Rosa of online investment bank GoBulling told Económico.
Sources at global investment bank BIG have agreed that the collapse in share prices “is connected to the image of the country”.
“The quite negative feeling of the market remains generalised, as the aversion to Portuguese risk has increased substantially over the last few weeks,” a source told Diário Económico.
BIG’s analysis comes “particularly since the creation of the new solution to capitalise Novo Banco” – the widely-criticised bond-dump that has resulted in scores of legal actions and calls for the dismissal of the Governor of the Bank of Portugal Carlos Costa.
The Banif resolution – which has cost Portugal almost as many billions as the BES debacle – is another case that has “removed all credibility” and “aggravated the risk” associated with Portugal’s financial sector, said the source.
Add to this “the inexistence of the State Budget for 2016” and “some of the new measures” pushed through by the new government, and you have reason enough for market jitters, BIG explained.
Another expert in the field, Pedro Lino of DifBroker, told DE: “Portugal’s risk is increasing due to the perception that public accounts aren’t as solid as one had hoped, and because there is distrust as to measures taken, whether these are in the public sphere or financial.”
After Novo Banco and “expansionist budgetary measures”, and “in the face of the distrust and uncertainty sweeping international markets, investors are opting to sell all their stocks, indicating a new wave of uncertainty”.
It is a story being repeated throughout the country’s financial papers, but intriguingly the calls for Costa to step down have muted over the last few days. Only last week, PS MP Ascenção Simões predicted on television that Costa would resign “within the next few days”. This shows no sign of happening, despite the gathering clouds on Portugal’s horizon.