Germany’s equity culture recovers

published 26 April 2019

Only 9% of German wealth is invested in shares and investment funds, according to the Bundesbank. "Germans like fixed interest rates, and are willing to sacrifice higher returns for that security," Kay Bommer, general manager at the German Investor Relations Verband, told Reuters.

Apart from being famously risk averse, many Germans burnt their fingers badly in the late 1990s. Close to two million people bought into the "heavily advertised but ultimately ill-fated flotation of state-owned Deutsche Telekom in 1996," Tobias Buck points out in the Financial Times. When the dotcom bubble burst, they suffered heavy losses. "This did a lot of damage to the reputation of the stockmarket," Martin Weber, a professor of economics at the University of Mannheim told the FT.

But now the lousy returns on savings accounts with interest rates at record lows have clearly started to irritate people and promote risk-taking. The number of shareholders in Germany rose to 10.3 million last year, a 12-year high, from a post-crisis low of 8.4 million.That's still very small compared to the US or Britain, but it's an encouraging development. The trouble is that history may be repeating itself. As in the 1990s, Germans may be once again turning to the stockmarket at the last stage of a prolonged bull run . So the "next crash could turn yet another generation off shares," says Buck.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Marina Gerner is an award-winning journalist and columnist who has written for the Financial Times, the Times Literary Supplement, the Economist, The Guardian and Standpoint magazine in the UK; the New York Observer in the US; and die Bild and Frankfurter Rundschau in Germany.

Marina is also an adjunct professor at the NYU Stern School of Business at their London campus, and has a PhD from the London School of Economics.

Her first book, The Vagina Business, deals with the potential of “femtech” to transform women’s lives, and will be published by Icon Books in September 2024.

Marina is trilingual and lives in London.