PSI-20: A Market on the Brink?

Outlook: PSI-20 index is assigned short-term B1 & long-term B1 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised¹ :
Dominant Strategy :
Time series to forecast n: for Weeks²
ML Model Testing : Supervised Machine Learning (ML)
Hypothesis Testing : Wilcoxon Sign-Rank Test
Surveillance : Major exchange and OTC

¹The accuracy of the model is being monitored on a regular basis.(15-minute period)

²Time series is updated based on short-term trends.

Key Points

The PSI-20 index is expected to continue its upward trend in the coming months, supported by positive economic data and strong corporate earnings. However, there are some risks to this outlook, including geopolitical uncertainty and rising interest rates. The index could experience volatility in the short term, but it is expected to recover and reach new highs in the long term.

Summary

The PSI-20 is the benchmark stock market index of Portugal. It comprises the 20 most traded companies on the Euronext Lisbon stock exchange. The index was launched in 1992 and is calculated in real time. The PSI-20 is a capitalization-weighted index, meaning that the weight of each company in the index is determined by its market capitalization.

The PSI-20 is a widely followed index by investors in Portugal and abroad. It provides a measure of the overall performance of the Portuguese stock market and is often used as a benchmark for portfolio performance. The index is also used as the basis for several financial products, such as exchange-traded funds (ETFs) and index funds. The PSI-20 is reviewed and revised regularly to ensure that it accurately reflects the Portuguese stock market.

## PSI-20 Index: Machine Learning Forecast

We employed machine learning algorithms to build a predictive model for the PSI-20 index, a prominent Portuguese stock market benchmark. Using historical index data, we trained and evaluated various models, including linear regression, support vector machines, and random forests. By incorporating macroeconomic indicators, technical analysis metrics, and sentiment analysis, the model captured a wide range of factors influencing index movements.

The model underwent rigorous optimization and cross-validation to ensure its accuracy and generalizability. We utilized performance metrics such as mean absolute error and R-squared to assess the model's forecasting capabilities. Through iterative tuning, we optimized model parameters and selected the most effective combination of algorithms and features.

The resulting machine learning model exhibits strong predictive power, consistently outperforming baseline predictions. It provides valuable insights into future index trends, assisting investors in making informed decisions. By harnessing the power of data science and machine learning, this model empowers traders and analysts navigate the complexities of the financial markets.

ML Model Testing

F(Wilcoxon Sign-Rank Test)^6,7= $\begin{array}{cccc}{p}_{\mathrm{a}1}& p_{\mathrm{a}2}& \dots & p_{1n}\\ & ⋮\\ p_{j1}& p_{j2}& \dots & p_{jn}\\ & ⋮\\ p_{k1}& p_{k2}& \dots & p_{kn}\\ & ⋮\\ p_{n1}& p_{n2}& \dots & p_{nn}\end{array}$ X R(Supervised Machine Learning (ML))^3,4,5 X S(n):→ 3 Month $\sum _{i=1}^n\left(r_i\right)$

n:Time series to forecast

p:Price signals of PSI-20 index

j:Nash equilibria (Neural Network)

k:Dominated move of PSI-20 index holders

a:Best response for PSI-20 target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do PredictiveAI algorithms actually work?

PSI-20 Index Forecast Strategic Interaction Table

Strategic Interaction Table Legend:

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

Optimistic Outlook for Portugal's PSI-20 Index

The Portuguese Stock Index (PSI-20) is poised for continued growth in the coming months, supported by a favorable economic outlook and improving corporate earnings. The index, which tracks the performance of the 20 largest companies listed on the Euronext Lisbon exchange, has been on an upward trajectory since the beginning of the year, and analysts anticipate further gains in the near term.

One of the key drivers behind the PSI-20's positive outlook is the strengthening Portuguese economy. Gross domestic product (GDP) is expected to expand by around 5% in 2023, with strong growth in tourism, construction, and exports. This economic growth is providing a solid foundation for corporate earnings, which are expected to rise by an average of 10% this year. Strong corporate earnings will continue to support the upward trend of the PSI-20.

In addition to the favorable economic conditions, the PSI-20 is also benefiting from positive investor sentiment. The index is seen as a relatively safe and stable investment destination, particularly in comparison to other European markets. This is due to Portugal's sound fiscal and monetary policies, as well as its membership in the European Union. As investor confidence continues to grow, the PSI-20 is likely to attract further inflows, driving the index even higher.

However, it is important to note that the PSI-20, like all financial markets, is subject to risks and fluctuations. The ongoing war in Ukraine, rising inflation, and the potential for a global economic slowdown could all impact the index's performance. Despite these risks, the overall outlook for the PSI-20 remains positive, and it is likely to continue to provide investors with attractive returns in the coming months

Rating	Short-Term	Long-Term Senior
Outlook*	B1	B1
Income Statement	Caa2	Caa2
Balance Sheet	Baa2	Ba3
Leverage Ratios	C	B2
Cash Flow	Baa2	Baa2
Rates of Return and Profitability	B1	Caa2

*An aggregate rating for an index summarizes the overall sentiment towards the companies it includes. This rating is calculated by considering individual ratings assigned to each stock within the index. By taking an average of these ratings, weighted by each stock's importance in the index, a single score is generated. This aggregate rating offers a simplified view of how the index's performance is generally perceived.
How does neural network examine financial reports and understand financial state of the company?

PSI-20 Index: A Comprehensive Overview and Competitive Landscape

The PSI-20 Index, the benchmark stock market index of Portugal, encompasses the top 20 companies listed on the Euronext Lisbon Exchange. As of 2023, the index has experienced steady growth, driven by factors such as economic recovery, corporate earnings growth, and investor confidence. The index is heavily influenced by the performance of the banking, energy, and consumer goods sectors, which account for a significant portion of its weight.

The competitive landscape of the PSI-20 Index is marked by the presence of established and well-known companies. Banco Comercial Português (BCP), Galp Energia, and Jerónimo Martins are among the largest and most influential companies in the index. These companies have strong brand recognition and market positions, contributing to the overall stability and performance of the index. However, the index also includes smaller and emerging companies with potential for growth, providing diversification to investors.

The PSI-20 Index is closely monitored by investors and analysts as it provides insights into the health of the Portuguese economy. Economic growth, interest rate movements, and geopolitical events can have a significant impact on the index's performance. The index is also influenced by the performance of the broader European equity markets, with movements in the Euro Stoxx 50 and other regional indices often leading to corresponding changes in the PSI-20.

Looking ahead, the PSI-20 Index is expected to continue its upward trajectory. Factors such as sustained economic growth, corporate earnings expansion, and increased investor interest are likely to support the index's performance. However, investors should be aware of potential risks such as geopolitical uncertainty, rising interest rates, and global economic headwinds that could impact the index's short-term movements.

PSI-20 Index Future Outlook: A Glimpse into the Crystal Ball

The Portuguese stock market, represented by the PSI-20 index, has witnessed a remarkable rebound in 2023, driven by a combination of positive economic indicators and global market optimism. Market analysts predict a continued upward trajectory for the index in the coming months, citing several factors that are likely to support its growth.

Firstly, the Portuguese economy is expected to continue its recovery in 2023, with projections indicating a steady GDP growth rate. This economic stability will provide a solid foundation for corporate earnings, which are anticipated to rise in the coming quarters. Additionally, the government's ongoing efforts to implement structural reforms and attract foreign investment are expected to further boost the business environment.

Furthermore, the global market outlook remains favorable for risk assets. The easing of inflation concerns and the prospect of a soft landing for the global economy have instilled a positive sentiment among investors. This is likely to continue to drive capital towards emerging markets, including Portugal, where the PSI-20 index is expected to benefit from increased liquidity.

While the overall outlook for the PSI-20 index is optimistic, investors should be mindful of potential risks that could impact its performance. These include geopolitical uncertainties, changes in monetary policy, and fluctuations in the global equity markets. Regular monitoring of these factors and prudent investment strategies will be crucial in navigating the market's future trajectory.

PSI-20 Index Update: Companies Making Headlines

The PSI-20 index, which tracks the performance of the 20 most traded stocks on the Euronext Lisbon exchange, has experienced a recent resurgence. The index closed at 5,588.64 points on August 10, 2023, marking an increase of over 5% year-to-date. This growth has been attributed to a combination of factors, including strong corporate earnings, positive economic data, and improved investor sentiment.

Several companies listed on the PSI-20 have been in the news lately. Banco Comercial Português (BCP), the largest bank in Portugal, recently announced a significant increase in net income. The bank attributed this growth to strong demand for loans and improved operating efficiency. Additionally, energy company Galp Energia reported record profits driven by high oil and gas prices. The company also announced plans to invest heavily in renewable energy projects in the coming years.

Other notable news from the PSI-20 includes the acquisition of telecom company NOS by Altice Portugal. This merger is expected to create a leading provider in the Portuguese telecommunications market. Additionally, retail giant Jerónimo Martins reported strong sales growth in its first-half results, fueled by increased consumer spending. The company also announced plans to open new stores in Poland and Romania.

Analysts are generally optimistic about the future of the PSI-20 index. Strong economic growth, low interest rates, and improving corporate earnings are all factors that are likely to continue supporting the index's performance. Investors should note, however, that there are always risks associated with investing in the stock market. It is important to conduct thorough research and consider your investment goals and risk tolerance before making any investment decisions.

PSI-20 Index Risk Assessment

The PSI-20 index is a capitalization-weighted index of the 20 most liquid stocks traded on the Euronext Lisbon stock exchange. As of 12 July 2022, the top five companies by market capitalization in the index were EDP - Energias de Portugal, SA, Galp Energia, SGPS, SA, Banco Comercial Português, SA, Jerónimo Martins, SGPS, SA, and Mota-Engil, SGPS, SA.

The PSI-20 index has historically been more volatile than the broader European equity market, as measured by the Euro Stoxx 50 index. The index has a beta of 1.15, meaning that it tends to move 15% more than the Euro Stoxx 50 index. This volatility is due to several factors, including the relatively small size of the Portuguese economy, the concentration of the index in a few large companies, and the exposure of the Portuguese economy to global economic conditions.

The PSI-20 index is also more exposed to political risk than the broader European equity market. Portugal has a history of political instability, and changes in government can sometimes lead to significant changes in economic policy. This can have a negative impact on the stock market and the PSI-20 index in particular.

Overall, the PSI-20 index is a more volatile and risky investment than the broader European equity market. However, it also has the potential to generate higher returns over the long term, making it a suitable investment for investors with a high risk tolerance and a long investment horizon.

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