Technology, gold and family firms

Continuing his A-to-Z of stock markets around the world, Liam Robb focuses on Germany, Ghana and Greece

Germany

Despite having the world's fourth largest stock market, the 82 million population have traditionally been the most equity-averse in Europe, partly because, for 20 years or so, an overly-strong Deutsche Mark, has offered a high return on German bonds compared with equities. In the last 12 months, however, the market has been up 25 per cent in local currency terms.

The rise cannot be attributed to sound economic fundamentals: unemployment is still rising and corporate earnings have been less than spectacular.

Rather, "the market's out-performance is all due to the Europe-wide restructuring story," explains Stephen White, fund manager for Foreign & Colonial's German Investment Trust. "Large companies such as Hoechst and Daimler have at last begun to realise that shareholder value should be at the top of their priorities, with cost-cutting measures - such as disposing of non-core businesses - increasingly common. Coupled with the current low-interest-rate environment, such moves are at last beginning to inspire international equity investors."

Of the 678 companies listed in , the DAX 30, comprising the top 30 (Siemens, Veba, Bayer, BASF, etc) is the most widely observed indicator of market performance.

The MDAX, comprising the next 70 largest stocks, is where many analysts believe the future lies, however, and companies such as Porsche, Wella and the sports goods manufacturer Adidas helped the MDAX to rise by 15 per cent last year.

Problems remain. Stock market capitalisation was under 27 per cent of GDP in 1996, against more than 100 per cent in the US and the UK, and in the past six years there have been only 77 new listings in - against well over 3,000 in the US.

But the culture is changing. Over half of the DM20bn (pounds 7.5 bn) raised by the recent Deutsche Telekom issue was raised by German institutions and domestic retail investors. Also monetary union may presage a higher inflation rate than the country has been used to under the Bundesbank - and equities are generally seen as the best hedge against inflation.

If the Deutsche Mark continues to weaken, White believes that more domestic money will find its way into the market. His favoured plays include Mannsesman, the mobile phone company, Hugo Boss, clothes manufacturer, and Volkswagen.

Ghana

Despite dazzling share price rises of 116 per cent in 1993 and 124 per cent in 1994, the past 12 months have not been kind to Ghana's stock market. Inflation hovers around 40 per cent, and with minimum wages for Ghana's 17.5 million people at just over $1 a day, it is clear that the injections of cash the economy needs will not come from the domestic population.

Cocoa, accounting for 15 per cent of the world's total, is an important export earner, but by far the biggest export is gold. The stock exchange in Accra lists 19 companies, including subsidiaries of large Western conglomerates - Standard Chartered Bank, Unilever Ghana, Guinness Ghana and Mobil Oil Ghana - but Ashanti Goldfields accounts for 88 per cent of the entire market's capitalisation.

Greece

Keeping the Greek stock market and the economy in general under some sort of control has kept the prime minister, Costas Simitis, extremely busy. Last year, the strong farming lobby held the country to ransom for 25 days over increases in VAT. More recently, a broking scandal forced the Athens Stock Exchange to close down for three days.

So it may be a surprise to learn that the stock market rose 17 per cent in the first three weeks of this year, mainly due to the government's attempts to meet the EU convergence criteria; inflation is down to 7 per cent and interest rates have halved to around 11 per cent. The move to a free market economy needs to be more rapid. Shares in many of the 200 stocks listed are still family-owned, severely hampering liquidity - indeed, the free-float is estimated to be no more than 20 per cent of the entire market's value.

The Hellenic Bottling Company is the largest stock, but banks such as Alpha Credit, Commercial Bank of Greece and Ergo continue to dominate the marketn

Country-specific German unit trusts are run by Barings, GT and Lloyds. Hill Samuel runs two German investment trusts. The recent best performer is Foreign & Colonial's German Investment fund. Many emerging markets and Emerging Europe funds have exposure to Greece; Templeton's Emerging Markets investment trust (with a 5 per cent weighting) is the recent top performer.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Chelsea are interested in loaning out Romelu Lukaku to Everton again next season
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
people
Extras
indybest
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Investment Accounting Change Manager

    £600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

    BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

    £450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Senior Analyst - ALM Data - Banking - Halifax

    £350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

    Java developer - Banking - London - Up to £600/day

    £500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

    Day In a Page

    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

    How Samuel Beckett became a French Resistance spy

    As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices
    Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

    Could smartphones soon be diagnosing diseases?

    Health Kit and Google Fit have been described as "the beginning of a health revolution"
    Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

    Can we learn to love Ryanair again?

    Four recent travellers give their verdicts on the carrier's improved customer service
    10 best over-ear headphones

    Aural pleasure: 10 best over-ear headphones

    Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
    Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

    Commonwealth Games

    David Millar ready to serve up gold for his beloved Scotland in the end
    UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

    UCI Mountain Bike World Cup

    Downhill all the way to the top for the Atherton siblings
    Save the tiger: The animals bred for bones on China’s tiger farms

    The animals bred for bones on China’s tiger farms

    The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
    A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

    A former custard factory, a Midlands bog and a Leeds cemetery

    Introducing the top 50 hidden spots in Britain
    Ebola epidemic: Plagued by fear

    Ebola epidemic: Plagued by fear

    How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
    Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

    From 'Parks and Recreation' to 'Guardians of the Galaxy'

    He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
    How live cinema screenings can boost arts audiences

    How live cinema screenings can boost arts audiences

    Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
    Shipping container hotels: Pop-up hotels filling a niche

    Pop-up hotels filling a niche

    Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
    Native American headdresses are not fashion accessories

    Feather dust-up

    A Canadian festival has banned Native American headwear. Haven't we been here before?