Investing in Portugal

Portugal FlagPortugal is an EU member country with a high-income and service-based economy. It enjoys vast forests, has a strong industrial base, and is an important agricultural exporter.

 

 

Portugal’s Main Industries

Portugal is economically known for its strength in:

  • Agriculture and Fishing Sector
    • Cereals
    • Olives
    • Wheat
    • Maize
    • Wine
    • Oranges
    • Fish
    • Industrial and Manufacturing Sector
      • Oil refining
      • Cement production
      • Machinery and electronics
      • Textile and footwear
      • Food processing
      • Forestry Sector
        • Pulp
        • Paper
        • Services Sector
          • Tourism
          • Transport
          • Telecommunication
          • Financial
            • Banking
            • Natural Resources Sector
              • Lithium
              • Tungsten
              • Tin
              • Uranium

 

Portugal’s Main Stock Exchanges

The two main stock exchanges in Portugal by size are:

  1. 1. Euronext Lisbon
    1. Created in 1769 as the Lisbon Stock Exchange
    2. Acquired in 2002 by Euronext NV to become Euronext Lisbon. It became part of the NYSE Euronext Group following their merger in 2007
    3. Trading occurs mainly in equities, bonds, warrants, ETFs, and derivatives
    4. Index

i. PSI-20 – composed of Portugal’s 20 largest companies by market cap and share volume

 

  1. 2. OPEX
    1. An alternative trading system (ATS) geared for trading in small and medium sized Portuguese companies
    2. Listing criteria is not very rigid and regulated
    3. Specializes in alternative investments and securities such as

i. Warrants and certificates

ii. Derivatives

  1. Investors include private equity investors, hedge funds, and pension funds

 

Glimpse into Portugal’s Equity Market

The performance of Portuguese equities has been heavily impacted by the Euro-zone peripheral economies’ debt crisis, as well as its own. The Market capitalization of its exchange fell by 17% in 2010 to $81.9 billion, and its equities have significantly underperformed during the last 3 years with a -30% return.

Investor capital and equity outflows have been considerable during this period, and investment should be limited with the current uncertain outlook. Portugal has recently negotiated a $110 billion bailout from the EU and IMF.

Stock Index Performance: PSI – 20

Portugal Stock Index Performance

 

Portugal’s 10 Most Profitable Companies in 2010

Portugal 10 most profitable companies

Ways to Invest in Portugal

There are a couple of different ways to invest in Portuguese companies:

  • Through a regional Portuguese Bank
    • Portuguese banks enable their clients to invest in securities listed on the exchange
      • Banco Espirito Santo
      • Banco Comercial Portugues (BCP)
      • ETFs with exposure to Portugal
        • CUT:NYSEArca – tracks the Beacon Global Timber Index
        • DFE:NYSEArca – tracks the WisdomTree Europe SmallCap Dividend Index
        • Through some international online brokers:
          • MB Trading
          • Interactive Brokers
          • TD Ameritrade
          • E-Trade
          • Questrade
          • optionsXpress
          • optionshouse
          • tradeMONSTER
          • Charles Schwab