Since the dotcom bubble burst, the lack of equity markets on which small, innovative companies can float has been a serious impediment to developing high-technology industries in the eurozone. Now things are stirring again.

Euronext, the transnational exchange, is launching Alternext, a Paris-based unregulated stock exchange modelled on London's Aim, on May 17. Jean-François Théodore, Euronext's chief executive, says he will launch smaller versions in other countries if Alternext succeeds.

There was even a call yesterday from Rudiger von Rosen, chairman of the Deutsches Aktieninstitut (DAI) investment lobby group, for Germany's Neuer Markt, the growth stock segment of Deutsche Börse scrapped in 2003, to be revived. Deutsche Börse said it was discussing the issue with market participants and would put proposals when there was demand.

In France, the move of IDM, a cancer treatment specialist, to the US has provoked concern about poor prospects for IT and biotechnology companies. The government is examining tax incentives to encourage investment in small research-based companies.

Germany's equity culture remains becalmed. DAI reported yesterday that nearly 700,000 people gave up share ownership last year, cutting the number of shareholders to 10.4m or 16.1 per cent of the population. That means more than half the shareholders added in the 1990s have got out since 2001. With bank finance also becoming more expensive, cash-rich private equity funds are having a field day. The mighty DaimlerChrysler is their latest target to buy out and break up.

Private equity is having a beneficial effect in forcing previously unthinkable changes on tired old companies, but a wider range of financing options is needed - particularly ones that allow promising companies to grow.

Telecom Italia

Marco Tronchetti Provera has often seemed a paradox. The Telecom Italia chairman would be on anyone's list of corporate modernisers in Italy - he was in the forefront of those urging the country to get its regulatory act together after the Parmalat scandal - yet corporate governance practices at TI were for a long time a target of irate institutional investors.

The problem was the cascade structure, a common system in Italy sometimes described as "capitalism without the capital". With a small personal stake Mr Tronchetti Provera was able to exercise influence via a pyramid of companies, each holding a controlling or leading stake in the company below. This gave rise to complaints that minority rights were being ignored.

That picture has been changing. Nearly a year ago, TI moved to having a majority of independent directors. Minority shareholders can propose a fifth of board members. Investor confidence was improved by TI's merger with its mobile arm on what were seen as fair terms, including cash. The number of companies in the pyramid has been reduced. The discount of its non-voting shares, seen as vulnerable to abuse, to the ordinary shares has shrunk.

Now comes recognition from Standard & Poor's Governance Services, which has accorded TI a rating of 7+ (on a scale of 1 to 10). It praises levels of transparency and disclosure and the boardroom changes, which "offset some of the structural and historical legacies that continue to burden Italian governance practices".

It is not a completely clean bill of health, though. After all, the pyramid still has four layers. There is room for improvement, says S&P, and innovations need to be monitored over a longer period.

Swedish taxes

Pär Nuder, Sweden's finance minister, has wisely toned down previous suggestions that taxes, already the highest in the world, might have to rise to meet the costs of the welfare system. Presenting his spring budget, he even said the government might be able to afford to cut taxes by a further SKr5.5bn in 2006.

Other countries look enviously at a country where economic growth is forecast at 3.2 per cent this year, twice the eurozone average, public finances are healthy, export growth is strong and inflation remains low.

The ruling Social Democrats, however, have seen their support slump. One reason is unemployment, which stood officially at 5.7 per cent in February but in reality could be twice as high. The government is proposing schemes and tax breaks to reduce it. Higher taxes, unpopular even with many SDP supporters, do not seem the way to restore confidence.


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