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According to the head of Germany’s stock exchange, Europe is in need of a “big bang moment” to enhance long-term investment in companies and take advantage of this year’s increase in stock market performance across the region.
Stephan Leithner, CEO of Deutsche Börse, told the Financial Times that EU policymakers should leverage the shift of investors to European markets from the US amidst rising concerns about tariffs.
He advocates for Brussels to accelerate initiatives to enhance the bloc’s competitiveness by advancing reforms that would promote domestic investment in regional companies.
“While many small steps have been taken, we are still missing that big bang moment,” he stated. “This is now the time for a big bang . . . there is a palpable sense of urgency.”
This year, Germany’s Dax index has outshined the US S&P 500 as investors move away from American equities in favor of European stocks that are less vulnerable to the ramifications of Donald Trump’s tariffs.
The Dax has surged by 14.8 percent since the year’s outset, in contrast to the S&P 500, which has experienced a 3.9 percent decline.
Notably, the EU has managed to avoid the brunt of Trump’s tariff assaults, which have dragged America into a trade conflict with key trading allies like Canada and China.
Leithner noted that the growing conviction among international investors regarding the potential strength of German companies is evident in the improved momentum and returns seen, indicating a revaluation is taking place. “Now is the moment to ramp up and invigorate competitiveness,” he stated.
For years, the EU has aimed to stimulate investment in the region by unifying its fragmented capital markets and urging both funds and individual investors to allocate more wealth into stocks. However, such endeavors have faced challenges due to pushback from certain nations.
A French initiative, supported by Italy, Spain, Poland, and the Netherlands, aimed to advance the capital markets union but faltered last year due to opposition from several smaller member states that were concerned about relinquishing their autonomy in rule-making.
Leithner mentioned that there is €11 trillion in “entirely unproductive” funds sitting in European savings accounts that could be better invested in the market.
“Reforms and expansions of the savings and pension systems are necessary,” he asserted, proposing a workplace retirement plan akin to the US 401(k) to foster interest in equity investing, along with the introduction of tax incentives.
He emphasized that the German government’s major spending initiative represents “a definitive position regarding the necessary changes” to rejuvenate the national economy.
Germany’s chancellor-in-waiting, Friedrich Merz, has plans to establish a €500 billion infrastructure fund and amend the country’s debt thresholds to permit unlimited borrowing for defense funding.
Leithner remarked that the private sector should complement public funding initiatives to create “a far superior ecosystem.”
As the head of Deutsche Börse, who has been with the Frankfurt exchange since 2000 and became the sole CEO in January, he added that executives are considering a possible listing of ISS Stoxx, the corporate governance and data division in which they hold an 80 percent stake.
“If we decide to proceed with the IPO, we’d definitely list in Frankfurt,” he noted, also mentioning a potential acquisition of the remaining shares from US private equity firm General Atlantic, which possesses a 20 percent stake in ISS.
