Portugal’s benchmark PSI 20 Index should outperform other European stock markets this year as foreign investors bet on the country’s economic recovery and a successful return to bond markets, said Pedro Pintassilgo, a fund manager at F&C Management Ltd.
The index has risen 8.5 percent this year, the biggest gain among 24 developed markets tracked by Bloomberg. The PSI 20 rose 16 percent in 2013, its best year since 2009, trailing the Stoxx Europe 600 Index’s 17 percent advance.
“Investors are starting to place their eggs in the periphery basket again and the performance of Portuguese stocks so far highlights this trend,” Pintassilgo, who helps manage 50 million euros ($68 million) in Portuguese assets from Lisbon for F&C, said in an interview today. “Portuguese banks, retailers and media companies should clearly benefit.”
Portugal emerged from its longest recession in at least 25 years in the second quarter of 2013. The country plans to exit its 78 billion-euro bailout program in May as it tries to regain full access to bond markets. Portugal’s 10-year bond yield in intraday trading today fell below 5 percent for the first time since August 2010.
Portuguese banks would benefit from falling sovereign-debt bond yields, Pintassilgo said. The value of retail and media companies in the PSI 20 index should also increase as the economy recovers and consumer spending picks up, he said. Retail sales rose 3.6 percent in November, after gaining in October for the first time since at least January 2011.
Cofina SGPS SA, a media company, lenders Banco BPI SA and Banco Espirito Santo SA and retailer Sonae SGPS SA are among the six best performers in the PSI 20 this year with gains of between 16 percent and 30 percent.
“Right now I see a lot more advantages than risks in investing in Portuguese stocks,” Pintassilgo said. “It’s a positive story.”