Portugal stocks and related exchange traded funds are strengthening as investors grow more optimistic about the country’s recovery prospects, with bond yields dipping to its lowest since the sovereign debt crisis.
The relatively new Global X FTSE Portugal 20 ETF (NYSEArca: PGAL) is up 5.8% so far this year and rose 8.8% over the past month.
Portugal’s economy has been in recovery mode since the second quarter of 2013, but the Eurozone sovereign debt crisis previously caused the economy the contract 4.6%, compared to where it was at the end of 2010, Bloomberg reports.
The country, though, is making strides in paying back debt, and recently sold 1.01 billion euros, or $1.37 billion, of 12-month bills at an average yield of 0.869%, the lowest yield since November 2009.
“I didn’t expect such low yields,” Filipe Silva, director of asset management at Banco Carregosa SA in Oporto, said in the article. “The perception of risk that investors have on Portuguese debt is dropping quite a lot.”
The bond sale is an encouraging sign for Portugal and PGAL because it shows the country can raise money on its own less than three years after the bailout. [Portugal ETF Benefits From Dash to Trash]
Eurozone industrial production increased 1.8% in November, the largest rise since May 2010. Additionally, economic confidence in the region rose in December to the highest since July 2011.
Nevertheless, the area suffers from high unemployment rate of a record 12.1%. Analysts expect the Eurozone to grow 1% this year, compared to 2.6% for the U.S.
Global X FTSE Portugal 20 ETF
For more information on Portugal, visit our Portugal category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.