Lisbon stock market flirts with defence companies

Lisbon’s stock market is eying defence sector companies in a bid to attract them to list on the PSI index.

Euronext Lisbon wants to take advantage of a new wave of defence investment in the aerospace sector in Europe to attract more companies and says that it is “working with the Portuguese ecosystem in order to benefit from these projects.

In a presentation on Thursday, Isabel Ucha, the CEO of Euronext Lisbon said that the Portuguese stock market “is working with the Portuguese ecosystem so that they can benefit from these initiatives”.

It is an effort to link Portugal’s capital market with a strategic priority that is gaining scale with the beefing up of European budgets.

For this reason, the Euronext group has designed a strategy based on various areas of focus such as the creation of European defence bonds that would help “channel private capital to defence and geostrategic autonomy projects in Europe.and the promotion of IPOready Defence.

IPOready Defence is the “largest pre-IPO programme in Europe to support companies in understanding and preparing for IPOs (floatation on the stock market) and for the first time aimed at the Defence and Aerospace sectors.

This movement is happening in a market where the investor base in Portugal continues to gain weight, especially on the retail side, with small investors already representing 18% of the trading volume on the Euronext Lisbon stock market. “What’s relevant is the diversity. An 18% retail participation rate isn’t too high,” stated Isabel Ucha, comparing it to Italy, where “it’s 25% and it’s a dynamic and efficient market.”
“We see this weight of small investors as quite positive because it increases liquidity and market dynamism,” and the presence of smaller orders tends to “facilitate” execution in the market, she said.

“Having smaller orders also allows for more deals to be completed,” explained Isabel Ucha, underlining the idea that the liquidity generated by retail investors can, consequently, make the market more attractive to professional investors.