Europe's New Economy: Competition by Integration - Page 3© Peter Weber
Page 3
Sep 3, 2000
20.000% of success
But now the situation is at change and as regards venture capital and technology shares Europe is quickly catching up. The first European country trying to find an answer to the NASDAQ challenge was Germany, which has introduced a special hi-tech segment in the Frankfurt Stock Exchange, the so-called Neuer Markt. Started in 1997, the Neuer Markt has received an almost enthusiastic welcome by investors and the first hi-tech stocks achieved a really surprising success.
The most astounding story is certainly the one of cartoon producer EM TV & Merchandising, whose stocks have been rising more than 20.000% in two years. After an impressive series of acquisitions, adding more and more activities, this year EM TV has acquired the rights of Jim Hanson’s Muppets Show and lately it has even bought a juicy 50%-slice of Bernie Ecclestone’s Formula One racing circus. The company founded by Thomas Haffa is now generally considered Europe’s answer to Disney.
New Markets for hi-tech stocks
Success stories like this as well as the large privatization of Deutsche Telekom helped to introduce a new shareholder culture in German society. In only three years the number of West German households holding shares has doubled from 10% to 21% and in the same period dozens of new of financial magazines and hundreds of web-sites on investing have been launched. But most important, the "Neuer Markt for high-tech companies has finally halted the flow of European listings to America´s NASDAQ" ( The Economist).
The successful model has soon been exported to other countries. In 1998 a New Market segment was introduced in France, in the Netherlands and in Belgium, in summer 1999 in Italy and in spring 2000 in Spain. The Internet has helped to spread the word and in all these countries the New Market has been the hottest spot for a new generation taking their first steps towards investing in equities. Present in six countries, the European New Markets already count over 400 most dynamic companies.
Frankfurt dealing London
In the same period the German stock exchanges (Frankfurt and seven regional exchanges) have also opened up to international markets, introducing second listings of equities from all over the world. Today the German stock market is the most complete and liquid of the continent. Every day German investors are discussing on various Internet boards hundreds of international shares from almost any part of the globe. For a country that only a few years ago had a pretty poor diffusion of equity investing this is surely a new quality.
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