Euronext announced Thursday that the benchmark index of the Lisbon Stock Exchange will no longer be the PSI20 and will only be the PSI from March 2022 and that “the methodology of the index will also be adjusted to improve liquidity and efficiency of the index and to better meet the needs of users. ”.
The new PSI will no longer have at least 18 listed companies and the lower limit of the "free float" of the market capitalization of the constituent companies (value of the shares of a company actually in circulation) will be set at 100 million euros.
For XTB analyst, Henrique Tomé, “this change can be seen”, since “for more than seven years the PSI20 has not counted 20 companies listed on the index and many of those listed on the index have presented frankly modest performances ”.
Banco Carregosa's Director of Investments (CIO), Mário Carvalho Fernandes, says that “it is expected that the number of companies will be lower than the current 18 and could be reduced from three to five companies, but stresses that this group is at the risk of exiting the index in March is only about 0,5% to 1% of the free float market capitalization of the current PSI20.
In an analysis published today, communications consultancy BA&N also considers that the new PSI should only have 15 companies because "the requirements presented by Euronext will further reduce the expression that the new PSI will make of domestic companies, by reducing the number of companies that can access it, due to the obligation to present a “free float” with a capitalization of 100 million euros ”.
However, Mário Carvalho Fernandes maintains that “the objective of an index such as the PSI20 is to be representative of the main listed stocks, and with these changes, the PSI index will be more representative of the evolution of stocks that are more relevant on the national stock exchange, reducing certain technical difficulties which have resulted from the inclusion of securities with less expression and which will continue to be included in the general index composed of all companies listed on the continuous market ”.
Henrique Tomé underlines that "the PSI-20 of recent years does not present any prospect of growth and that since its creation, the index has stagnated".
The new Euronext rules could limit the listing of new companies on the PSI in the short term, however, these measures could have positive effects on the index itself, believes the XTB analyst.
“This lack of market dynamism is due to listed companies which, although small in size, also show modest results which do not contribute to the growth of the Portuguese index, ending up taking any kind of interest away from the from internationals. investors ”, underlines Henrique Tomé.
On the other hand, communication consultant BA&N declares that "the reduction in the number of companies in the main basket of the Lisbon Stock Exchange will further narrow its sectors", since out of the 14 companies that meet the lower limit requirement for the free float 'on a market capitalization of 100 million euros, four are from the energy sector, two have a strong exposure to the retail trade and four are from the forestry, pulp and paper sector. In addition to these, there will be a telecommunications company, a post office, a bank and a construction company.
"National companies have not felt enough attraction or advantages to opt for their financing by the capital market, which is in slow agony, with the successive loss of the listed securities", specifies BA&N, adding that "the regulatory requirements, financing alternatives and the implications for governance were reported as obstacles for Portuguese entrepreneurs and entrepreneurs to use this form of financing, which has been so successful in most developed markets and which has helped Portuguese entrepreneurs. businesses to grow and develop faster.
According to Euronext, which manages several European stock exchanges, such as Paris, Amsterdam, Brussels, Dublin, Lisbon, Oslo and Milan, the new PSi comes after "a wide public consultation process", including Portuguese and international users of the index.
MC // MSF