LISBON, Oct 21 (Reuters) - Portugal’s securities market regulator, the CMVM, has extended until Thursday a ban on short-selling in shares of Portugal Telecom after a record low close on Tuesday - the first day of the ban.
The CMVM said in a statement a one-day ban it imposed on Tuesday will now be extended for two more trading days in order to prevent possible speculative deals. Short selling essentially bets on a stock losing value and can cause shares to fall faster.
In the past three sessions, its shares have plummeted after the bankruptcy of Espirito Santo holding company Rioforte last week raised the risk it will not recover 900 million euros ($1.2 billion) in debt from the company.
PT has also hit successive record lows in recent weeks on uncertainty over the company after the resignation of chief executive Zeinal Bava from PT’s Brazilian partner Oi and reports that Oi could sell its Portuguese assets.
Shares in PT, which no longer has operating assets and just holds a 26 percent stake in Oi and the Rioforte debt, have lost 40 percent so far this month following Tuesday’s 8.15 percent fall to 1.003 euros.
Kepler Cheuvreux brokers cut their target price for PT to 1 euro from 1.6 euros on Tuesday, warning that it is unlikely to recover most of the Rioforte debt. (Reporting By Andrei Khalip; editing by Susan Thomas)