Technology, gold and family firms

Germany

Despite having the world's fourth largest stock market, the 82 million population have traditionally been the most equity-averse in Europe, partly because, for 20 years or so, an overly-strong Deutsche Mark, has offered a high return on German bonds compared with equities. In the last 12 months, however, the market has been up 25 per cent in local currency terms.

The rise cannot be attributed to sound economic fundamentals: unemployment is still rising and corporate earnings have been less than spectacular.

Rather, "the market's out-performance is all due to the Europe-wide restructuring story," explains Stephen White, fund manager for Foreign & Colonial's German Investment Trust. "Large companies such as Hoechst and Daimler have at last begun to realise that shareholder value should be at the top of their priorities, with cost-cutting measures - such as disposing of non-core businesses - increasingly common. Coupled with the current low-interest-rate environment, such moves are at last beginning to inspire international equity investors."

Of the 678 companies listed in , the DAX 30, comprising the top 30 (Siemens, Veba, Bayer, BASF, etc) is the most widely observed indicator of market performance.

The MDAX, comprising the next 70 largest stocks, is where many analysts believe the future lies, however, and companies such as Porsche, Wella and the sports goods manufacturer Adidas helped the MDAX to rise by 15 per cent last year.

Problems remain. Stock market capitalisation was under 27 per cent of GDP in 1996, against more than 100 per cent in the US and the UK, and in the past six years there have been only 77 new listings in - against well over 3,000 in the US.

But the culture is changing. Over half of the DM20bn (pounds 7.5 bn) raised by the recent Deutsche Telekom issue was raised by German institutions and domestic retail investors. Also monetary union may presage a higher inflation rate than the country has been used to under the Bundesbank - and equities are generally seen as the best hedge against inflation.

If the Deutsche Mark continues to weaken, White believes that more domestic money will find its way into the market. His favoured plays include Mannsesman, the mobile phone company, Hugo Boss, clothes manufacturer, and Volkswagen.

Ghana

Despite dazzling share price rises of 116 per cent in 1993 and 124 per cent in 1994, the past 12 months have not been kind to Ghana's stock market. Inflation hovers around 40 per cent, and with minimum wages for Ghana's 17.5 million people at just over $1 a day, it is clear that the injections of cash the economy needs will not come from the domestic population.

Cocoa, accounting for 15 per cent of the world's total, is an important export earner, but by far the biggest export is gold. The stock exchange in Accra lists 19 companies, including subsidiaries of large Western conglomerates - Standard Chartered Bank, Unilever Ghana, Guinness Ghana and Mobil Oil Ghana - but Ashanti Goldfields accounts for 88 per cent of the entire market's capitalisation.

Greece

Keeping the Greek stock market and the economy in general under some sort of control has kept the prime minister, Costas Simitis, extremely busy. Last year, the strong farming lobby held the country to ransom for 25 days over increases in VAT. More recently, a broking scandal forced the Athens Stock Exchange to close down for three days.

So it may be a surprise to learn that the stock market rose 17 per cent in the first three weeks of this year, mainly due to the government's attempts to meet the EU convergence criteria; inflation is down to 7 per cent and interest rates have halved to around 11 per cent. The move to a free market economy needs to be more rapid. Shares in many of the 200 stocks listed are still family-owned, severely hampering liquidity - indeed, the free-float is estimated to be no more than 20 per cent of the entire market's value.

The Hellenic Bottling Company is the largest stock, but banks such as Alpha Credit, Commercial Bank of Greece and Ergo continue to dominate the marketn

Country-specific German unit trusts are run by Barings, GT and Lloyds. Hill Samuel runs two German investment trusts. The recent best performer is Foreign & Colonial's German Investment fund. Many emerging markets and Emerging Europe funds have exposure to Greece; Templeton's Emerging Markets investment trust (with a 5 per cent weighting) is the recent top performer.