EVERYTHING YOU NEED TO KNOW ABOUT THE STOCK INDEX
April 5, 2019
The DAX 30 is the best-known German index for equities. It consists of the 30 largest German stock corporations whose shares are traded on the Frankfurt Stock Exchange. The selection of companies admitted to the DAX is based on defined criteria, in which market capitalization and turnover play a crucial role.
The calculation method
Today, the DAX is calculated solely on the basis of the prices of the XETRA system. The prices of all 30 DAX shares are weighted differently and then added together. The decisive factor for the proportionate weighting of a stock corporation in the DAX is the market capitalization. This size is calculated by multiplying the current quotation by the number of shares in free float. As a result, all share packages held by shareholders holding a total of 5 percent or more of all shares are excluded.
The inclusion in the DAX
Every year, the Stock Indices Working Group decides on four dates (in March, June, September and December) which companies will have to leave the DAX and which companies will be newly listed. The selection criteria require a complex set of rules based on market capitalization and the volume of stock trading. The turnover of the shares is determined with the help of the order book turnover, which is made in the Frankfurt floor trading and in the XETRA system. In any case, the prerequisite for inclusion in the DAX 30 is that it is a stock corporation domiciled in Germany (or, under certain conditions, in the EU), that the listing of units in the Prime Standard and continuous trading in the XETRA system are carried out , In addition, at least 10 percent of the shares must be in free float.
The meaning of the DAX
Since its first calculation, which took place on 1 July 1988, the DAX 30 has quickly become the most important German stock index. Its listing is not only of great importance to all financial experts and investors, but is also widely regarded as a meaningful indicator of the situation and prospects of the German economy. Large German stock corporations are seeking to be included in this index and to remain there on a long-term basis due to the listing gain in the DAX.