The DAX 30 Stock Market Index (full name the Deutscher Aktien IndeX, which means German Stock Index) consists of 30 large, blue-chip German companies trading on the Frankfurt Stock Exchange.
Just like the FTSE 100 and S&P500 it is a capitalization-weighted index so it essentially measures the performance of the 30 largest, publicly traded companies in Germany. It is therefore a strong indicator of the strength of the German economy and investor sentiment towards German equities.
Companies that Make Up the DAX 30 Stock Market Index
The DAX has been a relatively stable index with 16 companies of the original 30 remaining in the index since its inception in 1988.
|Bayer (9.99%)||Munich Re (3.41%)||Deutsche (1.39%)|
|BASF (9.81%)||Volkswagen Group (3.27%)||Merck (1.16%)|
|Siemens (9.09%)||BMW (3.17%)||Lufthansa (1.06%)|
|SAP (7.57%)||Deutsche Post (2.61%)||Heidelberg Cement (1.05%)|
|Allianz (7.36%)||Adidas (2.48%)||Infineon Technologies (0.98%)|
|Daimler (6.65%)||RWE (1.9%)||Beiersdorf (0.97%)|
|Deutsche Bank (4.67%)||Henkel (1.89%)||ThyssenKrupp (0.82%)|
|Deutsche Telekom (4.02%)||Fresenius (1.85%)||K + S (0.76%)|
|Linde (3.91%)||Fresenius Medical Care (1.69%)||Commerzbank (0.63%)|
|E.ON (3.80%)||Continental (1.46%)||Lanxess (0.60%)|
*As at 30th September 2013
Companies are capped at a weight of 10% so legal provisions of the index are met and more importantly any mergers and acquisitions do not lead to the emergence of an ‘index heavyweight’ that will massively influence the value of the index.The top five companies of the DAX (Bayer, BASF, Siemens, SAP and Allianz) make up over 43% of the index. When investing in the DAX it is therefore imperative to see how these companies are performing as well as their relative industry sectors (pharmaceuticals, chemicals, electronics, IT and insurance respectively).
Admission to the DAX
For a company to be included in the DAX 30, it must be listed on the Prime Standard – the Frankfurt Stock Exchange. A minimum of 10% of the company’s shares must be held in public hands for a company to be admitted along with a number of other trading rules.
A company will fall out of the DAX if it falls to 45th or lower in terms of market cap or it becomes insolvent and a company will enter the DAX if it rises to 25th or higher.
The Board of the German Stock Exchange (Deutsche Börse) will meet every quarter to determine the admission or exclusion of companies from the DAX.
The Value of the DAX
The index began with a base date of 30 December 1987 and a base value of 1,000. Over the years the DAX has seen a large amount of takeovers, mergers, bankruptcies, and restructurings.
The DAX was in a bull market for an incredible 1,587 days between 2003 and mid 2007 with the value rising to 8,105.69 at its peak. Like most indices it took a big hit during the credit crunch and in 2009 we saw it fall to 3,580. Since then we have seen the DAX bounce back and on the 19th September 2013 we saw the DAX hit its all-time record high of 8,736 following an impressive 2013 of an over 1,000 point gain.
The globalization of German companies has been an important driver of growth for many companies in the DAX and has been responsible for its strong performance over the years. Companies such as SAP, Henkel, Volkswagen, Adidas and Bayer among others have seen impressive growth in the US market as well as emerging markets in Asia.