On 20 September, Germany’s flagship DAX Index will expand from 30 to 40 constituents, concluding the biggest reform in the benchmark’s 30-plus year history.
The enlargement is the final step in a comprehensive overhaul of rules announced in November 2020 that took into account the responses of more than 600 participants in an extensive market consultation. Qontigo’s global index provider STOXX Ltd. announced last Friday the ten new constituents:
Airbus SE, Qiagen, Brenntag SE, Sartorius AG (Pref shares), HelloFresh SE, Siemens Healthineers AG, Porsche SE, Symrise AG, Puma SE, and Zalando SE.
Launched in July 1988, DAX has always been made up of the 30 largest and most liquid German listed companies. The ten new constituents will increase the DAX’s representativeness of the domestic economy and foster its diversification.
The addition of ten new companies in the index lowers the average free-float market capitalisation of DAX constituents to EUR35.5 billion from EUR40.8 billion, Qontigo data show. While most entrants are smaller than existing constituents, there is one exception with Airbus SE. The maker of airplanes is the fifth-largest company on the Frankfurt Stock Exchange (FSE), but had up to now failed to enter the DAX as its local trading turnover was smaller than that of other candidate stocks.
That exchange turnover criterion, however, is being removed from the ranking process as of the current review, aiming to simplify the index rules. While members of DAX will now be ranked based on free-float market capitalisation only, their investability will be warranted by a requirement to fulfil minimum liquidity criteria instead1.
This will reduce the average 12-month turnover in DAX constituents to EUR24.1 billion from EUR29.3 billion before the changes.