Funds likely to flow towards Portugal as Coelho returns to power

After more than 5 years of economic and political turmoil, latest economic dockets and series of election point that stability is returning to European Monetary Union (EMU).

• Pedro Passos Coelho led his centre-right coalition to victory in Portugal's general election on Sunday, He became the first Euro zone Prime Minister to be re-elected in a country that faced severe austerity after it had to accept Euro zone bailout to prevent the country from defaulting to commitments. Mr. Coelho's party became the largest winner with around 37% votes in favor.
   
• Though he will be governing minority government, Opposition socialist party, which is pro-European has declared that they will not radicals and leftist to bring down the government. They have won 32% of the votes.
   
• Radical lefts have won 10% of the votes.

Though majority of the voters (63%) preferred government change it is unlikely that majority anti-bailout coalition would form due to the radical differences between parties. Moreover their strategy might not work when Euro as a Portugal's currency is under threat. Greek style adventure may not bode well for the country. In 2011, Portugal accepted € 78 billion bailout package.

Investors will look closely over how much compromise the government would have to make for four years of political stability, however overall sentiment is likely to receive boost since radicals posted their best results ever but unlikely to gain much traction in terms of votes.

Portugal's benchmark stock index currently trading at 5350, up 2.6% for the day so far.