Sunday 25th July 2021
Leading index with 40 members
Dax family is eagerly awaiting growth
As of September 20, the Dax will have ten more members. Some corporations are set, others are still calculating and speculating. The expectations after the disaster with Wirecard are high. The new members should not only bring a “breath of fresh air”, but also make the family “livelier”.
The Wirecard scandal has shaken Deutsche Börse. The Frankfurt market operator tightened the rules for the Dax family last year. The reform will be implemented this September. The biggest changes are for the flagship: the German share index. And the expectations are great.
It will be “livelier” thanks to the upcoming expansion of the Dax from 30 to 40 values, as DZ bank expert Christian Kahler hopes. Index expert Silke Schlünsen from the investment bank Stifel speaks of a “breath of fresh air”. A rejuvenation is imminent for the Dax in view of some high-growth climbers from the MDax.
Then also may airbus Get involved in the leading German index. The Franco-German aircraft manufacturer will be by far the largest of the ten new additions. With a current market weight of around 87 billion euros, the classic industrial group will also be a heavyweight among the long-established DAX members in the future, on a par with Daimler and Allianz.
The influence of Airbus on the Dax should soon be “considerable”, says DZ bank expert Kahler. Because while this share will soon have an index weight of five percent in the future, the other nine values, which will move up to the top stock market league in autumn, all together probably represent a total of only around eight percent of the future benchmark index, according to Kahler’s calculations.
Because of their size, the fashion retailers also count Zalando, the flavor and fragrance manufacturer Symrise, the medical technology group Siemens Healthineers, the holding company Porsche, the cooking box supplier Hellofresh and the chemicals dealer Brenntag in the new Dax as set.
It’s all in the mix
“The Dax 40 will be better mixed,” says Kahler. The auto sector, which is currently by far the dominant sector, is being overthrown. Other areas are gaining in importance, especially health and medical technology – companies that investors have long since kept an eye on in view of the corona pandemic.
In addition to Healthineers, there is also the pharmaceutical and laboratory supplier Sartorius in the starting blocks. Also be Qiagen Granted opportunities for promotion to the first stock market league. The diagnostics company is in tough competition, for example Beiersdorf, Puma, LEG Immobilien and the Hannover Re.
One more place could become free for the smaller among the big ones if the merger of the real estate companies Vonovia and Deutsche Wohnen is completed as planned until the decision on the new Dax composition.
Index expert Schlünsen welcomes the fact that the Dax will in future also reflect the economic change towards digitization more strongly. “Because that’s where the journey goes,” she says, referring to the Internet stocks Zalando and Hellofresh expected in the Dax as examples.
To ensure that the new Dax is even better quality than the old one, Deutsche Börse has introduced additional admission criteria and standards, for example with regard to operating profit and management regulations. In future, the stock exchange only wants to include profitable companies in the Dax. Bankruptcy candidates and corporations who fail to comply with their duty to publish interim reports on time should no longer have lost anything in the first series of German stock exchanges.
Lessons from the Wirecard scandal
The Frankfurt store operator thus drew conclusions from the loopholes in the old set of rules. Because the payment processor Wirecard was able to stay in the Dax for months despite a accounting scandal that caught up in the summer of 2019 and continued to get out of hand. In addition, it was with the Dax recording of Delivery Hero followed a company on Wirecard that has not yet made a cent of profit.
For private investors who, for example, invest in the DAX via exchange-traded index funds, so-called ETFs, not much will change on the whole. Despite the ten new companies, there is no impact on the score of the leading index. Only the weight of the individual shares changes. The ETFs will be rebuilt accordingly.
Deutsche Börse will announce on the evening of September 3rd who will ultimately get into the Dax and who will not. The basis is the August ranking list of listed companies in Germany, whereby the so-called volume-weighted average price per share over the last 20 trading days in August will be decisive. But that gives rise to all sorts of calculations and speculations.
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