The emerging market that is Germany

Article Abstract:

The German equity market is underdeveloped in terms of the market value of shares accounting for 24% of national income in 1995 compared with 125% for the UK and 77% for the US. German investors tend to prefer bonds though equities perform better, and German companies tend not to encourage ownership by outsiders. Accounts tend not to be transparent, but the government aims to change this. The government's privatization plans could also boost equities. Benefits are likely in the longer term rather than the short term.

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Germany: new-found value

Article Abstract:

German corporate restructuring could push up share values by 20% in the two to five years from 1996, according to Goldman Sachs. Companies can increase returns by relocating production abroad and direct investment abroad has risen fourfold over a decade. There are also signs of a weakening of institutional obstacles to restructuring such as restrictions affecting share buybacks. Manufacturing industry is most likely to benefit from share value rises but other sectors could also benefit.

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Equity culture spreads

Article Abstract:

Germans tend not to invest in shares and prefer more secure forms of investment which tend to bring lower returns. Companies prefer to use loans rather than raising funds by issuing shares. Investors may become more interested in shares following the privatization of Deutsche Telekom. The need for individuals to provide for their own retirement could also help boost the stock market. Younger investors are increasingly using unit trusts as a way of saving for their retirement.

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