Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: andreas_wonisch who wrote (125251)	10/4/2000 11:21:08 AM
From: Björn	Respond to of 1579807

Example of e-commerce bottom left: Items in Cart: 1 Last Item Added: N/A

To: andreas_wonisch who wrote (125251)	10/6/2000 5:04:23 PM
From: tejek	Read Replies (1) \| Respond to of 1579807

Andreas, for your information...... ____________________________________________________________ For Investors, Germany Could Be the Land of Opportunity By David Kurapka Senior Writer 10/6/00 4:34 PM ET Europe has slowing economic growth, a continually weakening currency and a central bank that surprised investors on Thursday by raising interest rates, demonstrating that it has not finished tightening. Those are not exactly strong arguments for abandoning the U.S. and looking at Europe as an investment opportunity. Nevertheless, recent events in Germany tell a different tale, one of a nation and region undertaking significant structural reforms. Last week, the German government announced a landmark pension reform plan that essentially begins the process of privatizing the German version of Social Security. Although it received little attention in the U.S., the announcement is significant. For U.S. investors, the move will translate into a stronger equity market as German investors start pouring money into stocks through their retirement plans. Essentially, the Germans are moving steadily toward what has been extremely controversial when discussed in the U.S.: augmenting the traditional public retirement system with voluntary private contributions. Under the plan, which still must be approved, German citizens will be allowed to put a portion of their income into a pension fund that will be invested in equities. "It's a first," says Josh May, an analyst at Medley Global Advisors, who has studied the plan. The government will match the contributions. The amount that can be contributed will be small at first -- only 0.5% of gross wages -- but will rise to 4% by 2008. For the U.S. investor, however, the importance is the increased flow of capital into the equity markets. "When you think of the creation of IRAs in the '70s in the U.S.," says May, "there is now a huge amount of capital in the markets because of that." More capital in the equity markets increases liquidity and demand, improving the overall equity climate. After all, many analysts have suggested that one factor behind the bull market of the 1990s was the huge amount of money entering the market from baby boomers' retirement plans. To be sure, that kind of impact -- if it occurs -- is years down the line. Stephan Monissen, an analyst with Salomon Smith Barney, estimates that 4.5 billion euros will flow into the new pension funds in 2001, rising to 20 billion euros in 2004 and 46 billion in 2008, which would represent 1.8% of Germany's gross domestic product. That's large, but not breathtaking. However, the reforms could trigger a greater infinity with equities. "[Germans] have a saving culture," says May. "There's not much of an equity culture there. However, people are catching on. It takes a while for these things to happen." Of greater significance, however, is that the pension reforms mark another step in the restructuring of Europe's largest economy. They come a couple of months after Germany enacted a major tax reform . That plan sparked similar tax reform efforts in other countries, including Italy. Similarly, the pension reform will likely trigger other nations to follow suit, probably Spain and Belgium at first. "Psychologically and over time it is a big plus," says John Tribolet, who manages the European portion of the Loomis Sayles International Equity Fund. "It is a small step, but it is an example of the restructuring of Europe. "Our outlook [on Europe] is very positive. The more you hear about these things, it makes us want to find companies that are positioned to be competitive in that new environment." History buffs will recall that under Bismarck in the late 19th century, Germany created the first public retirement system. Now Germany seems to be leading the way again. For investors, however, it represents a reason to think about Europe as a place to put money. -------------------------------------------------------------------------------- David Kurapka's Global Portfolio column appears Mondays, Wednesdays and Fridays on TSC. In keeping with TSC's editorial policy, he does not own shares in any companies or mutual funds mentioned in this column. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback and invites you to send it to David Kurapka.