The retail equity revolution, largely confined to the U.S. until a couple of years ago, has spread to Europe. Individual investors are jumping into mutual funds, snapping up shares through online brokerages and perusing Internet-based fund supermarkets to research top-performing money managers. As with most revolutions, there is no telling when or where this insurrection will stop or what venerable institutions will fall in the process.
By David Schutt, Managing Editor
October 2000
Institutional Investor Magazine
Europe’s retail equity boom is one of the most exciting financial developments in decades. As London-based Senior Editor Andrew Capon reports in “Europe’s Retail Revolution: Toppling the Old Order,” beginning on page 50, major banks and insurers, which currently control about 75 percent of personal assets, are scrambling to find ways to cater to this new and volatile market. At the same time, European start-ups and American asset managers and brokerages, many of which thrived in the U.S.'s own equity revolution, are fighting for market share. It’s too early to predict who will win the battle for individual assets, but the financial landscape is likely to be very different a decade from now.
Driving this investment rebellion is, of course, the exploding use of the Internet and the herd of dot-coms seeking to profit from the new technology. This month Paris-based Staff Writer David Lanchner looks at Europe’s e-volution in “e-Europe Bounces Back,” starting on page 37. The Internet stock frenzy in Europe was short-lived: This spring’s nasty technology correction pretty much shut the door on new stock offerings only a year or so after they had begun. As a result, infrastructure and consumer electronic commerce companies, among others, have interesting business opportunities - and inadequate funding to exploit them. Lanchner profiles eight financiers who survived the minicrash and are now trying to put the money back together with the projects.
Elsewhere in this issue we take a look at the very different style of individual investing found in Japan (“No Yen for Funds,” page 69). Unlike their European counterparts, asset managers in Japan have been unable to coax wary savers into mutual funds or equities. The funds are competing for the huge pool of long-term deposits reaching maturity at Japan’s giant Postal Savings Bank, which is currently offering interest rates of barely 0.10 percent. Tokyo-based Senior Contributing Editor Charles Smith notes that, remarkably, the savings bank is managing to hang on to most of the money. Clearly, Japanese funds have a bit of soul-searching to do as they try to reach a retail audience that has definitely not joined the revolution.
