Another bank abandons PSI-20 research

  • ECO News
  • 26 May 2020

The investment bank has announced to clients that it will stop making investment recommendations on Lisbon stock exchange companies.

BiG – Global Investment Bank will stop producing investment recommendations on Lisbon Stock Exchange companies. The bank has decided to change its strategy and to do a longer-term follow-up, which further reduces the number of financial analysts covering the PSI-20.

“By strategic decision, BiG chose to discontinue recommendations to companies on the PSI-20. The bank aims to continue to provide information to investors and we believe that it will be more useful to issue information on the state of the companies’ business than to issue recommendations with a target price based on a model that needs to be constantly changed according to market conditions,” the bank announced in a press release sent to clients, to which ECO had access.

The decision comes at a time when the research coverage of PSI-20 companies has decreased. In recent months, the Spaniard Bankinter has started doing the analysis but has taken the place that has been left empty by Haitong. The former Banco Espírito Santo Investimento (BESI), which is one of the largest players in the sector, announced in October that it had stopped doing financial analysis of Portuguese and Spanish stocks.

The size of the Portuguese market in the European context and tighter regulation – with the entry into force of the revision of the Markets in Financial Instruments Directive (MiFID II) which increased costs for banks – have caused a concentration in the sector.

Thus, around four dozen research institutions are covering Portuguese companies, all PSI-20 companies having analysis coverage, as well as five listed on the PSI Geral. BiG was one of the few to do so from Portugal.

From now on, the investment bank will no longer make investment recommendations or issue target prices. Currently, it had recommendations from Altri, Galp Energia, Jerónimo Martins and The Navigator Company. But it clarifies that it will continue to disclose information to customers.