Europe’s cautious savers catch on to share-dealing craze

Risk-averse Europeans have embraced share trading during the coronavirus pandemic, encouraged by soaring stock markets, rising household savings and the popularity of low-cost trading platforms.

The number of people in Germany who own shares directly or via funds rose by 2.2m to 12.4m last year — with the sharpest rise among those aged under 30, according to a recent report by the Deutsches Aktieninstitut, which represents German publicly traded companies.

This is a significant shift for a country with relatively low levels of share ownership and where people are traditionally conservative with their money — often preferring to earn meagre interest on bank deposits rather than invest in shares.

Christine Bortenlänger, managing director of Deutsches Aktieninstitut, said the “sensational” increase in share ownership, which included 600,000 people aged under 30 buying their first share last year, was “a good sign for the equity culture in Germany”. 

Yet there is a long way to go before Germany catches up with other countries. Even after the latest surge, only 15 per cent of Germans have a direct investment in the stock market, compared to about 55 per cent in the US and 33 per cent in the UK.

The investing craze is also catching on in the Netherlands, where the number of households investing in shares either directly or through funds increased 17 per cent to 1.75m last year, the biggest increase since the 1990s, according to a recent survey by Kantar.

Europe is Americanising and whereas investing used to be a hobby it is now a necessity because interest rates are so low and pension systems are becoming unsustainable

In France, 1.34m people bought at least one share last year, of which 400,000 had not done so since 2018, according to the French market watchdog. The total was down slightly from the previous year when the numbers were boosted by the privatisation of the gaming monopoly, Française des Jeux. 

The rise in retail share trading in Europe reflects a number of factors. Stock markets have rebounded sharply from the initial impact of the pandemic, Europeans have saved money they would have otherwise spent on holidays and going out, while many have been stuck at home with extra time on their hands during lockdowns. 

It has also become easier and cheaper in recent years for Europeans to invest in the stock market thanks to newly launched “neo-brokers” that have undercut the banks' high brokerage fees by offering zero-commission trading via user-friendly apps. 

“Europe is Americanising and whereas investing used to be a hobby it is now a necessity because interest rates are so low and the pension systems of European countries are becoming unsustainable,” said Nick Bortot, founder of Dutch neo-broker Bux, which has attracted over 400,000 clients since launching 18 months ago. 

The last time there was a similar boom in share ownership in Germany it did not end well. Millions of people bought shares for the first time in the 1996 privatisation of Deutsche Telekom and on the Neuer Markt technology exchange, both of which plummeted when the dotcom bubble burst, putting many Germans off the idea of buying shares.

European interest in share trading has been further boosted by the recent uproar about retail investors pushing up the share prices of some US companies, such as console retailer GameStop, and triggering losses at hedge funds.

Christian Hecker, co-founder of German neo-broker Trade Republic, said 5 per cent of its customers traded GameStop shares, while 80 per cent were investing an average of €300 a month in long-term savings. Its customer numbers quadrupled last year to 600,000, half of them buying shares for the first time. 

“We have three huge problems in Europe: a demographic decline that is putting pressure on pensions, negative interest rates and the expectation of rising inflation, which all create a toxic mix for savers,” said Hecker.