Decision about Dax expulsion: The days of Wirecard are numbered

After criticism of the Deutsche Börse regarding the handling of the financial service provider Wirecard, which is involved in a balance sheet scandal, the decision to remove the company from the index is imminent. A food delivery service and a flavor manufacturer are considered hot contenders for a Dax rise.

When will the insolvent scandalous group Wirecard fly out of the Dax, investors ask. There should be clarity in the course of the week. Deutsche Börse plans to publish the results of a consultation with market participants about changes to the index rules by August 13th at the latest. The implementation then takes about a week. Wirecard would have to leave the highest German stock market league in August – instead of after the regular index review at the beginning of September.

The food delivery service Delivery Hero and the fragrance and flavor manufacturer Symrise are considered candidates for promotion to the index of the 30 stock market heavyweights. After criticism of the handling of the insolvent payment service provider Wirecard, which was involved in a balance sheet scandal, Deutsche Börse announced a revision of the rules for the Dax share index. So far, a company only had to be "immediately" removed from a selection index in the event of a liquidation or rejection of the application to open insolvency proceedings due to insufficient assets.

Wirecard took over Commerzbank's place in the Dax in September 2018. This June, the company admitted air bookings of 1.9 billion euros. The Munich public prosecutor's office is now assuming "commercial gang fraud" in the company since 2015. A company's stock market turnover (trading volume) and market value (market capitalization) are decisive for membership of the group of 30 DAX companies.

The flavor manufacturer Symrise, traded as a candidate for promotion, is little known to the public. The smells and flavors of the Holzminden-based manufacturer, on the other hand, can be found in many products – for example in shampoo, toothpaste or in food. The company, which employs more than 10,000 people, earned a bottom line of 304 million euros on sales of 3.4 billion euros last year.

The food delivery service Delivery Hero made a profit last year thanks to the sale of its German business. But operationally the company is still in the red. In June, Emmanuel Thomassin, chief financial officer, said he could not yet make a forecast as to when the current business would break even. Delivery Hero operates local food ordering platforms in more than 40 countries and employs 25,000 people. This year the Berlin-based company expects worldwide sales of between 2.4 billion and 2.6 billion euros.

Index changes are particularly important for funds that precisely replicate indices (ETFs). There must then be reallocation, which usually has an impact on the share price. Belonging to the Dax is also a question of prestige: especially for international investors, the most important German stock market barometer is the figurehead of the German economy. The composition of the Deutsche Börse share indices is reviewed quarterly. The next regular date is September 3, 2020.