Although Europe produces successful companies, many choose to go public in the US. Chancellor Friedrich Merz (CDU) wants to change this.
Europe produces successful companies, but they often prefer the USA for an IPO – such as the Mainz-based vaccine developer BioNTech or the payment service Klarna. Chancellor Friedrich Merz (CDU) wants to change that and is calling for a common European stock exchange. There is a lot of support for this, but the implementation is complex.
“Mr. Merz’s proposal is the ideal solution for Europe,” says Marc Tüngler, managing director of the investor protection association DSW. A central European stock exchange, for which Frankfurt is ideal, would pool liquidity. “But this runs counter to national interests, as all countries want to have their own stock exchange.”
More than 500 trading venues in the EU
Merz recently called in the Bundestag to make better use of the power of the European internal market. “We need a kind of European Stock Exchange so that successful companies like Biontech from Germany don’t have to go public on the New York Stock Exchange.” The Mainz vaccine developer, who became known during the corona pandemic, went public on the American technology exchange Nasdaq in 2019.
“Full support” comes from SPD Vice Chancellor and Finance Minister Lars Klingbeil. This is a sensible step when it comes to promoting the integration of the European capital markets, he said on the sidelines of the annual meeting of the International Monetary Fund (IMF) and the World Bank in Washington.
Deutsche Börse also welcomed Merz’s move. “With over 500 trading venues, the EU has not only created the most fragmented market, but also the most opaque, with only around 30 percent of stock trading on transparent exchanges,” explained the DAX group. Strengthening the capital markets is necessary in order to overcome important social challenges – for example in corporate financing or pension provision.
11.5 trillion euros in savings accounts
In the USA there are strong stock exchanges and large investors, while the capital markets in Europe are fragmented. The EU has been struggling for years to… Financial markets in Europe, but implementation is stalling.
According to the European Central Bank (ECB), there is an estimated 11.5 trillion euros in people’s savings accounts in Europe. “This money loses value because the return minus inflation is negative,” says Tüngler. If only parts of it flowed into the capital markets, enormous sums would result. “But channeling savings to the capital markets doesn’t work in Germany.” Merz’s idea is good, says Tüngler. “Now action must follow.”
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BERLIN/FRANKFURT (dpa-AFX)
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