Industry Updates

Germany’s DAX index to conclude ‘biggest reform’ in its 33-year history

The main German index will increase in size from 30 to 40 constituents

Jamie Gordon

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Germany’s DAX index will absorb the ten largest companies from the MDAX benchmark, concluding a review process which began in summer 2020.

Previously incorporating a narrow sample of 30 German companies, the country’s headline index will now change to the DAX 40.

The Deutsche Boerse’s Qontigo, via its indexing arm STOXX, announced on Friday the companies to be added to the German large-cap index will be Airbus, Zalando, Siemens Healthineers, Symrise, HelloFresh, Sartorius, Porsche Automobil, Brenntag, Puma and Qiagen.

The index tracking German companies with slightly lower market caps and order book volumes, the MDAX, will shrink from 60 to 50 constituents.

The constituent reshuffle comes as part of a raft of changes made during the review process. The first of these came last December and requires DAX candidates to have positive earnings before interest, tax, depreciation and amortisation (EBITDA) in their two most recent annual financial statements.

This was followed in March with rules that extended index eligibility to all issuers in the German regulated market; requires adherence to audit provisions and financial reporting with sanctions for non-compliance; and the introduction of an additional DAX review in March.

Effective September, DAX indices will also remove their exchange turnover criteria and instead rank companies based on a mix of market cap and liquidity criteria.

The review process began alongside other reforms, including a tightening of corporate governance rules on the back of the accounting misconduct of former DAX constituent Wirecard.

Qontigo said the final batch of changes will be implemented on 20 September and will represent the “biggest reform in the benchmark’s +30-year history”.  

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