exchanges
Stable at a high level: Germany and its equity culture
After the 2020 boom, the number of shareholders in Germany fell again last year. Photo: Boris Roessler/dpa
© dpa-infocom GmbH
Germany has fewer shareholders again. Nevertheless, experts assess the development positively. But politicians could do more for the stock culture in Germany, they say.
The boom is followed by disillusionment. There are fewer shareholders in Germany again. A cause for concern? No, says Deutsches Aktieninstitut. After all, the number did not immediately fall below the 12 million mark again.
The Frankfurt experts see the loyalty of many investors to the stock exchange as a positive signal. There is great hope that the new traffic light coalition will make saving in shares more popular.
On average, almost 12.07 million people in Germany had shares, equity funds or exchange-traded index funds (ETFs) in their portfolio over the past year, as determined by the Deutsches Aktieninstitut (DAI). That is the third highest level since the late 1990s. “The fact that the bottom line is ultimately a small minus of a good 280,000 investors does not have to worry against the background of good figures overall,” the institute sums up. Among other things, “the strong stock market year probably led to profit-taking”.
record in the crisis
During the Corona crisis in 2020, the number of shareholders in Germany jumped by more than 25 percent to 12.35 million within a year, reaching the highest level since the record in 2001 when it was almost 12.9 million. Since 2020, foreign shareholders resident in Germany have also been counted.
“After the strong increase in 2020, the number of shareholders has stabilized at a high level,” stated the head of the stock institute, Christine Bortenlänger, on Wednesday. According to the current survey, 17.1 percent of the population in Germany is involved in the stock market, which is about every sixth person aged 14 and over. “So 2021 was another good year for equity culture in Germany,” summed up Bortenlänger.
However, private households in this country still hoard most of their financial assets in the form of cash or park it in checking and call money accounts – despite measly interest or even the threat of penalty interest. According to Bundesbank figures, at the end of September 2021, cash and bank deposits accounted for almost 2,921 billion euros of private financial assets, which had risen to almost 7.4 trillion euros.
But the longer interest rates remain low and inflation is high and the money in the account loses value overall, the more risk-averse Germany’s savers dare to invest in the stock market.
Investment behavior adapts
“As the extremely low-interest phase lasted longer and there was no prospect of a noticeable rise in interest rates in the near future, (…) more and more citizens reacted with adjusted investment behavior,” summarized an analysis published by DZ Bank at the beginning of January. “Many got into the securities business – especially young investors.” According to the BVI industry association, 2021 was probably the best sales year in the history of the domestic fund industry: retail funds aimed at broader investor groups had already surpassed the record level of 2000 with new business of EUR 85.9 billion at the end of September.
“In 2020, young people discovered the stock market for themselves,” writes the Aktieninstitut. Although the influx of under-30s slowed down in 2021, the bottom line was that another 49,000 investors in this age group were added. However, with a good 1.48 million, the 14 to 29 year olds are still the smallest age group among share savers in Germany.
benefit is recognized
Surveys show again and again that many people have recognized the benefits of long-term investment in the stock market for retirement provision – at least in theory. For example, in a recently published Forsa survey for the fund provider Union Investment, almost half (47 percent) of the 1003 adults surveyed stated that they could well imagine a fund savings plan as a basic investment for old age. Compared to the third quarter of 2019, the number of supporters increased by 18 percentage points.
In a survey commissioned by Postbank at the beginning of 2022, however, only a minority of 14 percent said that they wanted to buy more securities in the current year or enter the securities business. According to their own statements, 59 percent of the 2102 respondents do not plan to invest money in the stock market.
The “biggest lever to make the Germans a nation of shareholders” is, from the perspective of the institute, “the rapid introduction of a savings process with shares in old-age provision”. In its coalition agreement, the new federal government is “fortunately committed to more capital formation in retirement,” the institute states. “Now action must follow.”