Lisbon stock market listed companies’ returns double in 10 years – Portuguese companies outperform listed companies in Europe and America

The average Return on Investment on own capital of Portuguese companies listed on the Portuguese stock market Euronext Lisboa hit 14.5% in 2023 more than double the 6.1% average seen over the past 10 years.

The largest companies listed on the Lisbon stock market Euronext Lisbon became more profitable in 2023 following years of volatility according to a report from the Portuguese securities market commission CMVM.

“Despite a slowdown in economic activity in Europe, the financial results for companies listed on European stock markets (variation of 8.1%) and Euronext Lisbon (variation of 29.5%) have continued to recover”, says the report, explaining that the evolution in the results of European listed companies was essentially supported by an increase of 7.1% in revenues, although the profit margins fell back 0.7% on 2022.

In the case of Portuguese companies, revenues grew by 8% overall, but these too saw profit margins actually increase by 1%.

The average Return on Equity (ROE) on Portuguese stock market listed companies was 14.5%, “substantially above the historic average seen over the last 10 years (6.1%)”, it says.

In turn, US listed companies saw their results fall to 0.8% as the profit margins of American companies got squeezed.

And companies listed on the S&P 500 posted a fall in ROE on the like-for-like period, but nevertheless remained above the respective historic average.

“The increase in the revenues of US and European listed companies was fundamentally explained by the inflation rate. However, the slowdown in economic activity may affect the securities markets, leading to a squeeze on profit margins”, states the stock market supervisor.

Last year, the performance of Portugal’s listed companies on the stock market was influenced by the macro-economic context and the resilience of those listed companies as evidenced by the financial results.

The increase in benchmark interest rates from both the Federal Reserve and European Central Bank put negative pressure on listed companies.

But despite short term interest rates hitting their highest values since the 2008 crisis, there was only a moderate slowdown in economic activity in the main developed economies.

Contributing to this was the resilience of the labour market and internal consumption behaviour. This explains why 2023 ended on a positive high with the global index of medium and large companies, the MSCIACWI gaining 20.1% (including dividends).