Commission supports the revival of the Portuguese capital market

Today, the final report of the EU-funded Portuguese capital market review “Mobilising Portuguese Capital Markets for Investment and Growth” was presented in Lisbon in the presence of Commissioner Elisa Ferreira. The comprehensive diagnostic report, carried out by the OECD, serves as a basis for a series of recommendations to guide national decision-makers in Portugal in their efforts to create a regulatory and institutional environment where capital markets can support businesses and long-term investments. 

Following the 2008 financial crisis, the use of public capital market financing by non-financial companies in Portugal has decreased considerably. By the end of 2019, there were only 47 companies listed on the Euronext Lisbon, which is one third of the amount of companies listed back in 1997. Similarly, currently a very low savings ratio and the fact that households hold more than 50% of their savings in bank deposits, impedes a healthy development of capital markets and leads to retail investors lacking attractive investment opportunities. These demand and supply side dynamics make the Portuguese corporate sector dependent on bank loans and investors missing a more meaningful savings allocation.

The report identifies recommendations to revive the capital market in Portugal so that it can better allocate capital and serve as a growth engine. Moreover, the review recommends a series of actions, including promoting access to equity via stock-market, creating enabling environment for corporate growth, facilitating market-based long-term debt financing, enabling institutional investors to increase their equity holdings; simplifying listing rules to the benefit of smaller and more dynamic companies; and encouraging retail investors’ active participation. In order to achieve this, existing laws and regulations need to be aligned. The report recommends a broad stakeholder consultation in order to maximize the ownership of the measures.

The review was funded by the European Union via the Structural Reform Support Programme and implemented by the Organisation for Economic Co-operation and Development (OECD), in cooperation with the European Commission’s Directorate General for Structural Reform Support (DG REFORM).

The report can also be found on the OECD website:

http://www.oecd.org/corporate/oecd-capital-market-review-portugal.htm