The DAX 40, formerly known as the DAX 30 and commonly referred to as the DAX, is Germany’s flagship stock market index offering insights into the health of Germany’s largest publicly traded companies.
The DAX 40 houses Germany’s most influential large-cap companies, spanning sectors like automobiles (BMW, Daimler, Volkswagen), chemicals (BASF, Merck), technology (Siemens), financials (Allianz,) telecoms (Deutsche Telekom), and consumer goods (Adidas).
History
The origins of the DAX 40 date back to July 1, 1988, when it was introduced by the Frankfurt Stock Exchange to provide a reliable benchmark for tracking the performance of Germany’s top-listed companies.
In response to the Wirecard accounting scandal, Deutsche Börse announced on November 24, 2020, that the DAX index would expand from 30 to 40 members. The expansion itself took place in the third quarter of 2021, along with a tightening of the index’s rules.
How Is The Dax 40 Calculated
The DAX 40 derives its foundation from the market capitalisation of its constituent companies. Market capitalisation is calculated by multiplying a company’s share price by the total number of outstanding shares.
To ensure accuracy, only the free float market capitalisation is considered. This omits shares held by insiders, governments, or other entities, providing a clearer representation of a company’s influence.
Versions
The DAX offers investors two ways to track its performance, depending on whether they want to factor in dividends:
Performance Index: This is the more widely quoted version. It reflects the total return of the index, meaning it includes both the change in share prices and the dividends paid out by the companies in the DAX.
Price Index: This version is similar to stock market indexes in many other countries. It focuses solely on the changes in share prices of the DAX companies, without considering dividends.
Frequently Asked Questions
What does DAX stand for?
Dax is short for Deutscher Aktienindex, meaning German Stock Index.
