Strong stock market volatility has increased the presence of retail investors.
Small investors are gaining weight on the Lisbon stock exchange thanks to increased volatility in a pandemic year. The trend, which had already started in 2019, was reinforced last year and Euronext Lisbon’s chairwoman, Isabel Ucha, does not rule out the possibility of continuing. But she warns that after periods of volatility, calm follows.
“It has been a year we will not forget, and the market has seen large volumes of trading. In Lisbon, the trading volume was 30% higher in 2020 than in 2019 and it was the most volatile year in recent years,” Ucha said in a virtual meeting this Tuesday with a journalist, in which she evaluated the past year and presented the priorities for 2021. “In March we had volumes never seen in Euronext’s history.”
When the coronavirus arrived in Europe in March, the panic hit the markets with a strong sell-off caused by the perception that the economies had to close. Since then, monetary and budgetary stimulus, as well as developments in the Covid-19 vaccine, have led to a recovery in the major European markets. Unlike the US, they still failed to close 2020 on positive ground. The Portuguese PSI-20 devalued 6%.
“This very significant rise in the number of deals was underpinned by the increased participation of retail investors, who were much more active month by month, but particularly in the months of greater volatility,” points out Isabel Ucha. The number of trades by retail investors rose to 1,183,457 in 2020 (50% more than the 788,164 registered in 2019), while the average proportion of this type of investors rose to 9.82% from 9.76% in the previous year.
Despite the “erratic” year caused by the pandemic, Lisbon’s market capitalisation rose by 16% to 73.448 million euros, the highest figure since 2007. In the bond segment, there was a 46% increase in total issuances of listed bonds, but excluding government debt, the increase was 16%.