Dhe financial assets of Germans have shrunk more than they have in more than two years. According to the Bundesbank, they fell by EUR 98 billion to EUR 7.496 trillion in the second quarter. A central reason was apparently the price declines on the stock exchanges after the start of the Ukraine war.
This also had a noticeable impact on households that did not have any shares at all, but did have investment funds. According to the Bundesbank, private households built up claims worth 72 billion euros. However, they did not compensate for the significant valuation losses totaling 170 billion euros. In addition to cash, bank deposits and claims against insurance companies, the Bundesbank also includes securities whose price changes affect the measured financial assets – even if the price losses have not yet been realised.
Valuation losses for many securities
The valuation losses affected almost all market-related asset classes. Shares and other equity held by households lost EUR 89 billion in value, shares in investment funds EUR 77 billion and debt securities EUR 7 billion. The valuation losses in the second quarter thus exceeded those from the first quarter of 2022 by 56 billion euros.
Compared to the earlier quarters of the pandemic period, private households acquired relatively few shares in investment funds, the volume was 12 billion euros, but slightly more bonds at 5 billion euros.
Despite the high inflation, people were putting more money aside overall, in terms of cash and sight deposits. These stocks, for example, on the checking and call money account increased by around 36 billion euros to 2197 billion euros. At the beginning of the year, the increase was only 12.5 billion euros.
Insurance and other retirement products continue to be popular, with insurance claims up EUR 22 billion in the second quarter.
Household liabilities continued to rise and amounted to around EUR 2,090 billion at the end of the second quarter, EUR 30 billion more than in the first quarter.
“In the context of the still increasing overall economic output and the higher disposable income at that time, the debt ratio fell again slightly to 55.8 percent,” reports the Bundesbank. The debt ratio results from the sum of the debt in relation to the nominal gross domestic product.
After deducting debt, the net financial assets of private households fell significantly in the second quarter compared to the previous quarter by 127 billion euros to 5,406 billion euros. Real estate is not included in the data.
The financial assets of companies have also fallen
The financial assets of companies (excluding financial companies) were 6,097 billion euros at the end of the second quarter of 2022 and thus 26 billion euros lower than in the previous quarter. This was the first decline since the first quarter of 2020. Transactions, mainly securities purchases, increased financial assets by 36 billion euros. As with private households, however, these were more than compensated for by the noticeable valuation losses, especially in the case of shares and equity.
At the same time, the continued negative development on the stock exchanges for shares and equity rights issued by companies led to valuation losses of 405 billion euros. Overall, the liabilities of non-financial corporations fell again significantly and stood at 7,762 billion euros at the end of the quarter. Taken together, the net financial assets of non-financial corporations grew and amounted to minus 1,665 billion euros. Net financial assets were minus 46 billion euros, but this decline was more than offset by the massive negative valuation effects on liabilities.
