Internet investing is heating up on the Continent. Online accounts of European investors are expected to rise from 1.3 million today to 14 million in 2004, according to a report from Forrester Research, a Cambridge, Mass., technology research company. By comparison, U.S. investors had about 10 million online accounts as of mid-1999, according to the SEC.
Online brokerage services in Europe are a recent development. Most of the 50 online firms and banks surveyed had been operating less than two years. However, their offerings are competitive with U.S. dealers--60 percent of the firms offer after-hours trading and 49 percent provide access to foreign exchanges. The main problem is getting business, the report says. Only 18 percent of Europeans directly own stocks, compared with 40 percent of Americans.
However, share ownership is expected to rise as socialized retirement programs change and state-owned firms go public. Online investing will be most popular in Germany due to demographics and technology. More than 20 percent of Germans are high-income technology optimists, and the three largest online firms in Europe have German roots, the report says. Although they will lag behind Germany, Nordic countries are expected to have more online investors than the United Kingdom or France.
Discount brokers have the largest market share of online accounts at 63 percent. Universal banks and U.S.-based firms hold the rest. While discounters set the pace, they offer largely no-frills execution services, according to the study. Forrester predicts a price war among discounters, pushing transactions below 10 euros (about 10 dollars) from a high of 45 euros now, and a market shakeout by 2002.