Brexit delays decision on how to bolster Lisbon stock index -Euronext

LISBON, June 28 (Reuters) - A much-needed decision on how to streamline and beef up Portugal's flagging blue chip stock index PSI20 has been delayed by the "brutal uncertainty" caused by Britain's vote to leave the European Union, the new chief of Euronext Lisbon said on Tuesday.

The index, which used to have 20 blue chips, now groups only 18 companies and has been losing volume and weighting following the loss of investor confidence due to Portugal's debt crisis in 2011-13, the collapse of Banco Espirito Santo in 2014 and the litigation that followed.

It (Other OTC: ITGL - news) plumbed 20-year lows after the Brexit vote on Friday.

Maria Joao Carioca said it was important to take a decision on how to breathe new life into the index as soon as possible, "but unfortunately Brexit did not simplify things for us - now is the worst moment to try to make any fundamental shifts ... the grade of uncertainty is brutal."

Carioca, who took over as president of Euronext Lisbon less than a month ago, said the index could be improved by changing rules on capital and free float, cutting red tape, attracting more companies to the index and making equity at least as attractive as debt from the fiscal point of view.

Market players have ridiculed the fact that the index had fewer companies than its name suggests and questioned when and how that will be fixed, but Carioca said the solution was not as simple as changing the name as it does not solve any problems.

On a positive note, she said Portugal could benefit from a potential relocation of financial sector jobs due to Brexit.

The country is already set to become Euronext (Lisbon: ENX.LS - news) 's second-largest base after Paris following an ongoing transfer of some jobs from Belfast to Porto where costs are lower and where 120 people are being hired.

Euronext, which operates bourses in Paris, Amsterdam, Brussels, London and Lisbon, has itself seen its shares drop more than 30 percent since the start of the year as it struggles to stay competitive after Deutsche Boerse AG (Xetra: 581005 - news) and London Stock Exchange Group Plc agreed to merge in a $30 billion deal. (Reporting By Daniel Alvarenga, writing by Andrei Khalip, editing by David Evans)