The number of shareholders in Germany has shrunk again. After the record high in 2022, the number of shareholders fell again last year to just under 12.32 million. A year earlier, a good 12.89 million people had stocks, stock funds or exchange-traded index funds (ETFs) in their portfolios – that was more than ever since 1997, when the German Stock Institute (DAI) began the survey. Was that just a flash in the pan? The decline of around 570,000 “does not change the long-term upward trend,” the stock institute emphasized on Thursday.
For the fourth year in a row, the number of stock savers has remained stable above the twelve million mark. “In view of the turnaround in interest rates, persistently high inflation and cloudy economic prospects, the number of stock savers is a good result,” said the head of the stock institute, Christine Bortenlänger. Based on the total population aged 14 and over, the calculations show that in 2023 a good one in six (17.6 percent) was involved in the stock market. The highest rate in Germany was in 2001 at 20 percent.
The institute attributes the fact that the number of shareholders fell from 2022 to 2023 to, among other things, the fact that many people had less money to invest due to inflation. According to preliminary calculations, consumer prices were 5.9 percent higher on average in 2023 than in the previous year. In addition, the increased savings interest rates may have lured investors away from the stock market. “Current and fixed-term deposits celebrated a comeback. Against this background, the stable number of stock savers is a good result,” stated the stock institute. Some investors probably also took advantage of the record high of the German stock index at the end of the year to take profits. The DAX rose to 17,003 points in mid-December.
Many younger people sold stocks
The number of shareholders fell last year, especially among younger people: of those under 40, 514,000 sold their stock investments. Overall, however, according to the stock institute’s interpretation, the current figures show: “Investors have understood. Stocks, stock funds and ETFs are indispensable for building assets and retirement provision, because a broadly diversified stock portfolio brings a long-term return of six to nine percent per year.”
According to an analysis by DZ Bank, price increases played a key role in ensuring that private households in Germany became richer overall last year: “In the financial assets of the German population, this was reflected in increases in the value of shares, funds and certificates of around 200 billion euros.” However, only a good 1.8 trillion of the total of more than 7.9 trillion euros of financial assets are in stocks and funds. According to DZ Bank calculations, savings deposits and cash amount to 3.2 trillion euros.
Institute: Politics must promote equity culture
For years there has been discussion in Germany about how to strengthen the stock culture. But the start of a so-called generation capital, which is intended to strengthen the statutory pension with stock returns, has been postponed. “The false narrative of gambling on the stock market continues to haunt Berlin’s corridors,” criticized the DAI. “The corresponding draft law continues to move back and forth between the departments. A fatal signal.” In contrast to other industrialized nations, Germany is missing the opportunity to “flip the switch for better retirement provision for all citizens.” In the USA, for example, the state has long been promoting retirement provision through the capital market. No wonder, then, that the shareholders of the 40 companies in the first German stock exchange league predominantly come from abroad: investors from abroad are in the majority of 24 DAX companies, as the consulting firm EY has analyzed for 2022. On average, one in five shares in a DAX company is held by shareholders from North America. This also means: A large part of the record dividends expected from the companies in the index for the 2023 financial year – almost 55 billion euros, according to Dekabank’s calculations – will flow abroad. DAI boss Bortenlänger warned: “The government must no longer hesitate and must finally introduce generational capital this year.”