Renewables Charge Sends Lisbon Stocks to Their Best Level in 15 Years

Lisbon’s main equities gauge is turning heads again. After a decade and a half spent mostly in recovery mode, the index has quietly edged past the barrier last seen in the aftermath of the sovereign-debt crisis. Two household names – EDP Renováveis and Galp Energia – are doing the heavy lifting, but the rally is rippling through the entire PSI and reigniting a debate about how long the good times can last.

Rally pushes PSI to fifteen-year high

Investors woke up this week to the sight of the PSI hovering above 8 100 points, a level untouched since April 2010. Monday’s close at 8 178,21 represented a two-day gain of nearly a full percentage point. That might look modest on its own, yet the index is already up 20 % in the past twelve months and almost 22 % year-to-date when dividends are included. Local traders say the milestone is psychologically important: many young Portuguese professionals in the market today were still at school the last time the national benchmark traded this high.

Why EDP Renováveis and Galp are in the driver’s seat

The spotlight belongs to two very different energy stories. Wind-and-solar specialist EDP Renováveis climbed to €12,50 after disclosing the sale of a 49 % stake in a US renewables platform to Ares Management for roughly $2,9 B. Beyond the cash injection, analysts liked the signal that the company can recycle capital quickly while still targeting an extra 2 GW of capacity this year.

Further south, in Sines, Galp Energia advanced to €17,22 on news that the first of ten Plug Power GenEco™ electrolyser units has arrived on-site. Once the full 100 MW green-hydrogen plant is up and running, management expects to shave 110 000 t of CO₂ from annual emissions – and, just as crucially for investors, to qualify for higher-margin European decarbonisation subsidies. A better-than-expected quarterly profit of €0,50 per share, well above the consensus €0,29, added fuel to the move.

Spill-over benefits for the rest of the PSI

Momentum has not stopped at the energy complex. BCP is more than 50 % higher this year, riding the tail-wind of wider interest-rate spreads, while CTT has jumped 43 % on parcel-delivery growth. Even stalwarts such as EDP and REN have caught a bid thanks to dividend yields north of 6 %, turning the PSI into one of Western Europe’s rare pockets of double-digit total returns in 2025.

Looking back to 2010 – and 2000

Crossing the 2010 watermark invites historical comparisons. The PSI remains a far cry from its dot-com-era peak at 15 081 in March 2000, yet today’s rally is arguably on firmer footing. Back then, the index was dominated by telecom start-ups and leveraged conglomerates; now the weighting tilts toward regulated utilities, banks that have cleaned up their balance sheets, and export-oriented manufacturers. Daily turnover, averaging €88 M over the past quarter, is still lower than the pre-crisis heyday but markedly healthier than the thin volumes seen five years ago.

Can the party last? Views from Lisbon and abroad

Local brokerages such as Banco de Investimento Global argue that as long as bond yields stay elevated, Portugal’s high-dividend names can keep attracting foreign funds searching for income. International houses are more cautious. J.P. Morgan flags geopolitics – from Ukraine to the Middle East – as a wildcard for oil prices and supply chains, while UBS points to the Bank of Portugal’s warning that the country will swing back to a budget deficit of roughly 1,3 % of GDP next year.

Macro clouds on the 2026 horizon

The consensus economic forecast still calls for real-GDP growth of about 2 % in 2026, but several headwinds could upend that script: higher-than-anticipated interest-rates, slower absorption of Plano de Recuperação e Resiliência funds, and the new 0,75 % counter-cyclical capital buffer on banks that takes effect in January. Property valuations remain elevated, prompting the Banco de Portugal to impose an additional 4 % systemic-risk charge on lenders heavily exposed to mortgages.

Environmental policy is another swing factor. While projects like Galp’s hydrogen hub reinforce Portugal’s reputation as a green-energy testbed, the European Union’s evolving carbon-border rules could squeeze exporters if global demand cools.

What to watch next

Seasoned traders suggest tracking three data points between now and year-end: the pace of EDP Renováveis’ asset rotations, updates on Galp’s production guidance amid OPEC+ shifts, and whether private consumption holds up through the Christmas retail season. Should any of those pillars wobble, the PSI’s newly reclaimed altitude could be tested quickly.

For now, though, Lisbon’s market is enjoying a rare alignment of domestic optimism and international capital flows. Whether it turns into a sustainable rerating or merely a high-altitude pause will be the story to follow into 2026.