Reduction of listed companies in PSI makes it one of smallest in EU

  • Lusa
  • 18 March 2022

The new PSI index, which replaces the PSI20, has lost Novabase, Pharol, Ramada and Ibersol, with these changes coming into force on March 21.

The removal of four listed companies from the PSI index places the Lisbon stock exchange among the smallest in the European Union, with 15 companies, below the 21 that, on average, make up the reference indexes of European markets, BA&N said.

The new PSI index, which replaces the PSI20, has lost Novabase, Pharol, Ramada and Ibersol, with these changes coming into force on March 21.

With only 15 listed companies, according to BA&N’s research unit, the PSI is “one of the smallest baskets among the stock markets of the European Union countries”, exceeding only six of the benchmark indexes of the 27 countries of the European Union.

Portugal now has a ‘benchmark’ with only more securities than Slovakia, Cyprus, Slovenia, Luxembourg, Croatia and the Czech Republic, but the same as Bulgaria, and lags behind other Eastern European economies, such as Poland and Romania, indicates the BA&N analysis.

The same information states that the 15 listed companies in Lisbon’s PSI index are “reduced compared to the average number of listed companies present in the reference indices of the stock markets of the various European countries: 21 companies”.

This average, notes BA&N, is the result of a significant disparity in the number of listed companies among the various stock markets, including, in particular, the Slovakian stock market, which has only five companies or the cases of Cyprus, Slovenia and Luxembourg, with less than ten listed companies each.

There are also 10 stock exchanges with a total of between 20 and 29 securities in their respective stock market reference indexes – this being the situation in countries such as Ireland, Greece, Belgium and the Netherlands.

“Above 30 stocks, there are only seven markets in the EU, three of which have 40 listings: Italy, France and the ‘all-powerful’ Germany. In Spain, the IBEX currently has a basket of 35 stocks,” points out the BA&N study.

Unlike the Lisbon PSI, the German DAX rose from 30 to 40 shares at the end of last year.

Altogether, the companies that remain in the main showcase of the Portuguese capital market have a combined market capitalisation of €74.1 billion. “This stock market value of these 15 companies represents 35% of the national Gross Domestic Product, in other words, the wealth generated annually in the country. The difference with the exit of the four listed companies is minimal, taking into account that they are worth, as a whole, only €633 million,” BA&N notes.

In August last year, Euronext announced that the Lisbon stock exchange’s reference index would cease to be PSI20, becoming just PSI as of March this year.

“The index methodology will also be adjusted to improve the index’s liquidity and efficiency and meet users’ needs better,” the text said.

The adjustments to the PSI index methodology will include determining a minimum size for companies to be included in the index at the time of the quarterly and annual reviews and the elimination of the requirement for a minimum number of constituents – previously set at 18.