Growth in Share Ownership
Share Culture in the US
In the United States, where people traditionally have a greater appetite for risk-taking than we do here in Europe, share ownership is firmly rooted in the financial culture. It is estimated that seventy five million US citizens (or one in every two adults) have some form of stake in the stock market.
This long-standing equity-owning culture has been brought about by a number of features of US financial life, including the growth in share schemes as part of employee remuneration packages, individuals taking greater responsibility for their personal pension plans and more generous tax incentives for equity investment.
Equity Ownership in the UK
Similar patterns are starting to emerge in recent years in the UK market, where there have been a number of significant demutualisations and where numerous state-owned companies have been floated on the stock exchange. These developments have helped to bring about increased levels of share ownership in the UK, where approximately one quarter of the population are now equity investors.
Graph 1: Equity ownership in major countries - % of adult population, 1998.
Note that Irish figures are prior to the Eircom flotation in 1999
Irish Preference for Property
As relative newcomers to the equity arena, the Irish unsurprisingly lag behind their UK and US peers, yet have surpassed European counterparts such as Germany and the Netherlands. Traditionally prioritising home ownership, our historical preferences have centred upon property investment and deposits.
Graph 2: Irish v OECD economic growth.
More Positive Attitudes to Equity Investment
As Irish savings have increased, so has their awareness of the necessity to provide for themselves in later life and thus the importance of building up a substantial asset base. Furthermore, as investor knowledge broadens and as fears about equity investment are reduced, the benefits of share ownership are finding an ever-increasing audience. Undoubtedly, low deposit rates has also helped underpin this trend, as it has prompted investors to look for investment opportunities that yield greater returns.
Privatisations, Demutualisations, and Employee Share Schemes Leading to Increased Share Ownership
Many Irish people have become shareholders for the first time as state-owned companies and financial institutions follow the UK trend of privatisations and demutualisations and as co-ops reorganise their shareholder structure. Indeed, many of those who held onto their share allocations have witnessed substantial gains. Finally, an increasing number of Irish companies, following the US example, operate share schemes for their employees, who as a result have directly experienced the benefits of share ownership. Accordingly, equity ownership is no longer regarded as the preserve of a select minority.
