DAX or Deutscher Akitienindex is a German blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. It was previously known as Deutscher Aktien Index 30, the index was created in 1988.
Prices are determined from the Xetra, DAX measures the performance of the Prime Standard’s 30 largest German companies in terms of order book volume and market capitalization. It is the counterpart of the FT 30 and the Dow Jones Industrial Average.
The L-DAX Index is an indicator of the German benchmark DAX index’s performance after the Xetra trading venue closes based on the floor trading at the Börse Frankfurt trading venue.
German stock market: system and indices
The Frankfurt Stock Exchange is the largest in Germany and one of the world’s major stock exchanges. It is one of the world’s leaders in the financial system. Accordingly, the listed companies here are popular among investors worldwide. More than 1000 companies with a total capitalization of 1.9 trillion are traded here.
Xetra is a primary trading system of the German stock exchange. Xetra is the main market for German equities and ETFs, as well as exchange commodities and shares.
German stock exchange operates on the electronic trading system Xetra, where are several main German Stock market indices on traded: DAX index and its derivatives DAXPlus, Cdax, DivDAX, LDAX, MDAX, SDAX, TecDAX, and VDAX. As German DAX is a leading and most influence indicator for traders, we have closer look at it.
Versions
The DAX is equipped with two versions; the performance index and price index.
• The performance index is the more commonly cited.
• The price index is more similar to commonly quoted indexes in other countries.
Xetra DAX index trading
You can trade on Xetra DAX index from any part of the world. This soft sets out numerous attractive features for trading DAX 30 index:
- Automatic record of all transactions into one register;
- Opportunity to choose the most favorable price to get the potential benefit from the transactions;
- Built-in market tracking tool;
- Analysis of each buys or sell order.
The system is a great place to perform the operation of buying and selling Germany 30 companies’ shares.
Where DAX index sprung up?
The DAX Index was created in 1987 with a base weight of 1000. The 12000 weight was firstly crossed in 2015. The list of companies whose capitalization is involved in calculating the index is regularly revised because companies can be excluded if they cease to be among the 45 largest.
Germany DAX 30 stock market index: what should we know?
DAX is the most important stock index in Germany and in Europe generally. The index is rated like the average market capitalization scaled value of the share prices of the biggest joint-stock companies in Germany, while the capitalization is rated only on the basis of shares in free float. The index taken into consideration quarterly paid earnings on stocks, stipulating that it will be reinvested in shares. Thus, the index reflects the total return on capital.
Unlike most indices, the DAX is updated after the close of the major stock exchange. It uses the next day’s futures contract prices.
The calculation of the German DAX index
In order to a part of the DAX 30 index formation, a company has to meet strict requirements. Namely, operate in the local market, to have a large capitalization, and be listed on the German stock exchange.
The DAX index is calculated for the 30 largest and most liquid companies in prime and standard sectors and represents 80% of the total capitalization. The DAX stock index rates from the base value of 1000 points. It is net-weighted by capitalization and free-float. The volume limit in the index for one company is 10%, and it is made every second.
The Xetra DAX index is done both according to the price change method, and accounting the dividends that companies pay as long as their plowback in similar securities. Germany DAX 30 stock market index is rated in EUR, USD, CHF, AUD and JPY. The index is represented by the next industries:
- 20% of chemical companies;
- 14% of automotive;
- 11% of industry;
- 10% insurance companies;
- 8% of software companies;
- 6% of pharmaceuticals firms;
- 6% of consumer companies;
- 21% compose other companies (in accordance to data on Frankfurt Stock Exchange official site).
Investing in DAX 30 index
Dax 30 index is attractive for traders, who operate in American, European and Asian exchanges. Investing in the German 39 companies a pretty popular way among traders to take a potential profit on the market. There are several ways to invest in DAX 30 index:
Trade the companies’ stocks from the DAX 30 index by the mean of a broker. The broker usually gives the opportunity to work with CFDs on index, which is a way advantageous.
- Operate through Exchange Traded Funds
Such funds form portfolios of stocks and offer investors to purchase. Here beginners can get a set of highly liquid stocks, collected by masters. The price will be much lower than buying the stock yourself.
Buying futures contracts on the dax index is an effective mean of work with a popular stock instrument.
Dax index price usually provides traders with a high degree of liquidity, long trading hours, and solid trading spreads. Nowadays many successful traders use the Contracts for Difference to operate with DAX index. Trading German DAX with CFDs let you open long or short positions.
What affects the DAX 30 price?
The online DAX 30 graph shows the general economic situation in Germany, and its state directly depend on the reporting of the companies included in it:
- profit indicators,
- information about company’s activity;
- dividend payments,
- investor interest.
Germany is a major engine of the EU economy and displays the overall situation in the Eurozone. For this reason, DAX 30 traders have no need to analyze the readings company, they just need to follow the economic occasions in Germany. The euro exchange rate and the monetary policy of the ECB also have a severe impact on the DAX 30 index rate.
Sight on Future Prices
DAX has a different angle on having the updated future prices for the next day, regardless whether the stock exchange has already closed. Changes are made regardless of the review dates. However, index members will be evicted from the index if they break away from the top 25 or if they no longer rank among the top 45 largest companies.
Criteria for Listing
For a company to be listed on the DAX, it must meet these criteria:
- It has to be listed in the Prime Standard, a stock segment of the Frankfurt Stock Exchange with maximum transparency.
- It has to have been continuously traded on Xetra and have a widely held stock of at least 10%.
- The market capitalization based on free float or widely held stock.
- The companies that fulfill these requirements are further sorted according to two characteristics
- The order book turnover on the Xetra trading platform and on the floor trading in Frankfurt.
The listed DAX company: what companies are included in DAX 30 index?
Most of the companies, which are a party to Xetra DAX index also traded on American exchanges. This way, they serve as an indicator of the US market dynamics. Since the trading session in the European market starts earlier than in the US, the index may indicate the current state of the American market.
German 30 company list comprises leading world companies such as Bayer, BMW, Adidas, Allianz, Deutsche Bank, Siemens, Volkswagen Group, Henkel, and many others.
Siemens takes 10.8% of index, Bayer – 8.9%, SAP – 8.8%, BASF – 8.4%, Allianz forms 7.7% of DAX 30 index. The total capitalization of the DAX 30 companies is 971.8 billion euros, the dividend yield amount to 2.7%.
• Bayer
• BASF
• Siemens
• SAP
• Allianz
• Daimler
• Deutsche Bank
• Deutsche Telekom
• Linde
• E.ON
• Munich Re
• Volkswagen Group
• BMW
• Deutsche Post
• Adidas
• RWE
• Henkel
• Fresenius
• Fresenius Medical Care
• Continental
• Deutsche
• Merck
• Lufthansa
• Heidelberg Cement
• Infineon Technologies
• Beiersdorf
• ThyssenKrupp
• K + S
• Commerzbank
• Lanxess
Conclusion
Dax 30 is the German superior index, covering about 80% of the total capitalization of the German stock market. Approximately 80% of the profits generated by the DAX 30 companies came from outside Germany. Furthermore, since many of the DAX companies are huge multinational firms with a significant impact on global markets, the index can also be used to estimate global trends. The Germany DAX 30 stock market index is a leading tool for traders to buy and sell on the exchange.
