Portugal's Far-Right Surge: A Crossroads for Eurozone Infrastructure and Equity Value

The political earthquake in Portugal’s 2025 election has sent shockwaves through Europe’s financial markets. The far-right Chega party’s historic rise—from 1% to nearly 24% of the vote—has injected unprecedented uncertainty into EU-funded infrastructure projects and domestic policy agendas. For investors, this is a pivotal moment to reassess exposures to Eurozone equities and infrastructure stocks, while hedging against volatility. Let’s break it down.

The Political Crossroads: Chega’s Anti-EU Stance Threatens Funding Stability

Chega’s surge is not just about immigration—it’s a direct challenge to Portugal’s reliance on EU funding. The far-right party’s hostility toward Brussels-backed policies like the Green Deal and Common Agricultural Policy (CAP) could disrupt the €22 billion in EU recovery funds allocated for infrastructure. These funds are critical for projects like rail electrification, renewable energy grids, and affordable housing.

But here’s the catch: Chega holds 58 seats in parliament, making it a kingmaker in legislative battles. While Prime Minister Luís Montenegro’s AD coalition (89 seats) refuses to form a coalition with Chega, ad-hoc compromises are inevitable. This creates two risks:
1. Policy Gridlock: Delays in approving EU-funded projects due to political squabbles.
2. Policy Shifts: Pressure to redirect funds toward nationalist priorities, like rural infrastructure or anti-immigration border controls, sidelining green or urban projects.

Sector-Specific Risks and Opportunities

Infrastructure & Utilities: A Split Landscape

• The Threat: Utilities firms like EDP Renováveis (EDPR), which rely on EU Green Deal funding for wind/solar projects, face existential risks if Chega succeeds in diluting climate mandates.
• The Play: Focus on firms insulated from EU policy whims. Portugal’s Mota Engil (MOENGIL), a construction giant with a 60% domestic market share, could thrive on government-backed rural projects.

Real Estate: Betting on Domestic Demand

Portugal’s housing crisis—rents in Lisbon up 7% annually—has fueled Chega’s rise. The party’s anti-immigration stance could reduce foreign buyer demand, depressing luxury property valuations. But here’s the silver lining:
- Affordable Housing Boom: A Montenegro-Chega compromise might fast-track public housing projects. Imovirtual (IMV), a real estate tech firm, could benefit from data-driven affordable housing initiatives.

Action Plan: Tactical Exposure and Hedging

1. Buy Domestic Plays:
2. Mota Engil (MOENGIL): A 20% discount to its 5-year average P/E ratio and 40% exposure to government contracts.

3. Galp Energy (GALP): A Portuguese oil and renewables giant pivoting to domestic energy security, less reliant on EU climate targets.

4. Hedge Against Eurozone Volatility:

5. Short the Euro ETF (FXE): A 10% allocation to bet on currency weakness amid political fragmentation.

6. Buy Put Options on Stoxx 600 Infrastructure: Protect against a sudden sell-off in EU-linked stocks.

7. Avoid the Climate Casualties:
   Firms like NextEra Energy (NEE)—heavily tied to EU Green Deal mandates—face execution risks if Portugal’s grid projects stall.

Conclusion: Portugal’s Uncertainty = Your Opportunity

Chega’s rise is a stark reminder that nationalism is reshaping Europe’s economic landscape. For investors, this isn’t just about risk—it’s about identifying companies that can thrive in a “Portugal First” world. Back domestic champions, hedge the volatility, and stay nimble. This is your moment to position for a post-EU-funding era.

Action Alert: Add MOENGIL and GALP to your watchlist. Pair with FXE puts for downside protection—don’t let Portugal’s politics catch you flat-footed.

DISCLAIMER: This is not personalized financial advice. Consult your advisor before acting.