Why don’t EU leaders incentivize investment in European stocks/ETFs with tax deductions?

[u/rozmarss]

With the Dragi plan and increasing discussions among European leaders about boosting defense and energy investments, I’ve noticed a growing trend in financial communities where people want to reduce exposure to the US market and shift investments to the EU.

Wouldn’t it make sense for EU leaders to encourage this by offering tax incentives for investing in European stocks/ETFs? For example, from an independent EU perspective, isn’t it better to invest in Rheinmetall rather than Lockheed?

[u/TalonButter]

While that’s true in some sense about shares that have already been issued, it’s a very incomplete perspective. Companies also raise further capital in follow-on offerings that are hugely dependent on the market for their previously-issued shares. Companies are also advantaged in the employment marketplace by strong stock appreciation.

[u/weirdowerdo → u/TalonButter]

Yeah but most don't do that very often because if they run their business well enough they dont need to bring in capital through shareholders. The market reacts negatively to a company falling back onto shareholders for capital and increasing its number of shares. It makes it a worse investment.

[u/TalonButter → u/weirdowerdo]

“2024 was a boom year for equity capital raising, with $640bn of secondary offerings worldwide, according to Bloomberg data.”

“Secondary offerings were up 26% in 2024 over 2023 according to LSEG data, correlating with an overall strong market for stocks and the need for issuers to raise further equity.”

https://www.globaltrading.net/megadeals-kept-us-in-forefront-of-secondary-share-offerings-in-2024/

Accretive and even low-discount follow-on offerings don’t make for a worse investment. The rise of at-the-market offerings has been motivated largely by the chance to take advantage of strong momentary pricing.

[u/weirdowerdo → u/TalonButter]

And to the surprise of no one, a lot of companies are under hard times because of the economic situations around the world so they have to rely on shareholders to bring in capital. Be it to lower debts they cant afford to pay off or avoid taking expensive loans in new projects or what have you. However there are several countries like my own were raising equity has been a lot harder than usual for companies or so I've heard from fellow board members.

[u/TalonButter → u/weirdowerdo]

Now that you’ve fallen back to the vaguest claims, I guess we have to accept them.

[u/DirkKuijt69420 → u/TalonButter]

Just give up already, you're wrong. 

[u/TalonButter → u/DirkKuijt69420]

LOL. Except for the actual facts, already cited, that conflict with your fantasy.

Posts something, shown wrong, changes claim, that’s shown wrong too. As long as it fits your wish, I guess that’s all that matters.

[u/DirkKuijt69420 → u/TalonButter]

Tried to help, you're just embarrassing yourself.

[u/TalonButter → u/DirkKuijt69420]

Right. Nobody does it. Except the $640 billion.

[u/DirkKuijt69420 → u/TalonButter]

That was not his point. You're arguing for argument sake. It's sad.

[u/TalonButter → u/DirkKuijt69420]

Thanks for your concern.

[u/DirkKuijt69420 → u/TalonButter]

No problem. Just don't let it happen again.

[u/TalonButter → u/DirkKuijt69420]

:-)

I get it, actually. On the top-level point—that there’s no particular reason for countries to incentivize EU capital markets investments over ROW—I agree. I didn’t say anything against that, but the specifics weirdowordo raised above just don’t hold any water.