Economy 4.0

Germany encourages citizen stock trading

David Brancaccio Feb 5, 2011
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Economy 4.0

Germany encourages citizen stock trading

David Brancaccio Feb 5, 2011
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TEXT OF STORY

JEREMY HOBSON: Germans and Americans have a lot in common. We both love Volkswagens. And Hot Dogs. But apparently, there’s a big difference when it comes to ordinary people buying and selling stocks. In the U.S., about 45 percent of households own stock. In Germany, it’s around ten percent, which is something the people who run the stock exchange there would like to change.

Marketplace’s David Brancaccio continues his Economy 4.0 series about the changing global economy with this report from Munich.


DAVID BRANCACCIO: Bernard Junemann is a journalist and a big name on Germany’s financial TV channel. Viewers have a hunger for business news he says, but not necessarily because Germans want to buy stock themselves.

BERNARD JUNEMANN: Their investment is much more conservative. There are a lot of regrets.

Regrets about what happened the last time many Germans went ga-ga over stocks in the late 90s, when their big phone company sold shares for the first time. Deutsche Telekom stock went up 700 percent. Germans also snapped up dot-com shares.

JUNEMANN: Definitely they became interested or they became greedy. Whatever you prefer to say. And when the bubble burst, people lost a lot. Some of them, about 90 percent of their assets.

Since then Germans have gravitated toward insurance products often sold by local banks. But Rainer Riess, a managing director at the German Stock Exchange argues that the financial turbulence in the last two years is why folks should diversify their portfolios with stocks.

RAINER RIESS: So introducing more equity culture in Germany and in Europe in the wider sense is something that’s absolutely necessary.

The stock exchange is now promoting stock ownership through an online sweepstakes it conducts with the German newspaper Handelsbatt. Contestants begin with 20,000 Euros in fake money and use real securities prices to trade online for three months. The latest winner is this young man, 30 year old Klaus Neukert of Munich.

DAVID BRANCACCIO: So how did you do?

KLAUS NEUKERT: 1.4 million

DAVID BRANCACCIO: 1.4 million euros!!

KLAUS NEUKERT: Yes, unbelievable

He’s no rube off the street. Neukert is a bond expert at a major bank and used derivatives to win the contest. His prize: a sweet Porsche 911 Carrera. If only he can find a way to pay for the car’s insurance — about $9000 a year in real cash.

In Munich, I’m David Brancaccio for Marketplace.

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