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Europe needs a “big bang moment” to boost long-term investment in companies and capitalise on this year’s surge in the region’s stock markets, according to the head of Germany’s stock exchange.
Stephan Leithner, chief executive of Deutsche Börse, told the Financial Times that EU officials should make the most of investors switching into European markets away from the US as worries over tariffs rise.
He wants Brussels to speed up plans to make the bloc more competitive by pushing forward on reforms to encourage domestic investment in the region’s companies.
“Many small things have been done but the big bang moment was missing,” he said. “It’s now a moment for a big bang . . . the sense of urgency is there.”
Germany’s Dax index has outperformed the US S&P 500 this year as investors dump American equities in favour of European stocks, which are less exposed to the impact of Donald Trump’s tariffs.
The Dax has risen 14.8 per cent since the start of the year, while the S&P 500 has fallen 3.9 per cent.
The EU has largely escaped the worst of Trump’s barrage of tariffs, which have pushed America into a trade war with major trading partners including Canada and China.
“The conviction of international investors that German companies can play a strong role is documented in that improvement in momentum, in the returns that have been made, the revaluation that has happened,” he said. “Now the opportunity is . . . to step up and re-energise the competitiveness.”
The EU has long tried to encourage investment into the region by unifying its fragmented capital markets and encouraging funds and ordinary savers to put more money into stocks. But efforts have been hampered by resistance from some countries.
A French proposal backed by Italy, Spain, Poland and the Netherlands to forge ahead with a capital markets union ran aground last year as it was opposed by a majority of smaller member states, wary of losing the right to set their own rules.
Leithner said there was €11tn worth of “totally unproductive” cash sitting in European savings accounts that should instead be ploughed into the market.
“The savings and pension systems need to be reformed and extended,” he said, adding that a US 401k style product — a workplace retirement plan — would foster enthusiasm for equity investing, and tax incentives could be created.
The German government’s flagship spending package marks “a very clear stance around the change that is needed” to re-energise the country’s economy, he said.
Germany’s chancellor-in-waiting Friedrich Merz plans to create a €500bn infrastructure fund and change the country’s limits on debt to allow unlimited borrowing to fund defence.
The private sector should complement plans for public funding to create “a much better ecosystem”, Leithner said.
The Deutsche Börse boss, who has worked at the Frankfurt-based exchange since 2000 and took over as sole chief executive in January, added that executives were exploring a listing of ISS Stoxx, its corporate governance and data unit, in which it has an 80 per cent stake.
“We’d always list in Frankfurt” if the decision is made to IPO the company, he continued, saying that they were also considering buying the remaining shares from US private equity firm General Atlantic, which has a 20 per cent stake in ISS.
