WHEN THE PORTUGUESE state sold off most of its 30% stake in oil and gas company Galp Energia in October last year, 200,000 retail investors, about 3% of the adult population, subscribed, contributing more than 40% of the €1.1 billion raised in the IPO.
That deal brought retail investors back to the market in big numbers for the first time since 2000 but institutional investors had already been paying attention for some time. The takeover battles for Portugal Telecom, one of the country’s largest companies, and BPI, one of its largest banks, had already attracted an influx of money from a variety of players new to Portugal, such as hedge funds and a new crop of private Portuguese activist investors. The hyperactive trading around these events and the fevered bid speculation, which spilled over to other corners of the market, helped drive average daily trading volumes on Euronext Lisbon in 2006 up 35% on 2005 levels to 51.1 million shares a day. It also helped push the main Portuguese index, the PSI 20, up by more than 30%, making it one of the best performers in the eurozone, despite the fairly disappointing performance of the economy.