The DAX 30 (its full name is Deutscher Aktien IndeX, which means German stock index) is made up of 30 large first-class German companies listed on the Frankfurt Stock Exchange.
Like the FTSE 100 and the S&P 500, it is a capitalized weighted index, which means that it mainly measures the evolution of the 30 largest publicly traded companies in Germany. Therefore, it is a powerful indicator of the strength of the German economy and the confidence of investors in the equity of that country.
Companies that make up the DAX 30
The DAX is a relatively stable index that retains 16 of the 30 original companies since its creation in 1988.
|Bayer (9.99%)||Munich Re (3.41%)||Deutsche (1.39%)|
|BASF (9.81%)||Volkswagen Group (3.27%)||Merck (1.16%)|
|Siemens (9.09%)||BMW (3.17%)||Lufthansa (1.06%)|
|SAP (7.57%)||Deutsche Post (2.61%)||Heidelberg Cement (1.05%)|
|Allianz (7.36%)||Adidas (2.48%)||Infineon Technologies (0.98%)|
|Daimler (6.65%)||RWE (1.9%)||Beiersdorf (0.97%)|
|Deutsche Bank (4.67%)||Henkel (1.89%)||ThyssenKrupp (0.82%)|
|Deutsche Telekom (4.02%)||Fresenius (1.85%)||K + S (0.76%)|
|Linde (3.91%)||Fresenius Medical Care (1.69%)||Commerzbank (0.63%)|
|E.ON (3.80%)||Continental (1.46%)||Lanxess (0.60%)|
* As of September 30, 2013
The maximum weight of companies is limited to 10% to comply with the legal provisions of the fund and, more importantly, mergers and acquisitions do not give rise to “heavyweights” within the index that can massively influence the value of this. The five main DAX companies (Bayer, BASF, Siemens, SAP and Allianz) represent more than 43% of it. When investing in the DAX, it is therefore essential to know how these companies are behaving as well as their corresponding industrial sectors (pharmaceutical, chemical, electronic, IT and insurance, respectively).
Admission in the DAX
To be included in the DAX, companies must be listed on the Prime Standard, the Frankfurt Stock Exchange. At a minimum, 10% of its securities must be publicly traded, in addition to meeting other negotiation requirements.
Companies are excluded from the DAX if they are below post 45 in terms of market capitalization or are insolvent, and become part of the index if they exceed post 25.
The German Stock Exchange Council (Deutsche Börse) meets every quarter to decide which companies are admitted to the DAX.
The index began trading on December 30, 1987 with a basic value of 1000. Over the years, the DAX has witnessed numerous acquisitions, mergers, bankruptcies and restructuring.
The DAX accumulated a bullish streak of no less than 1587 days between 2003 and mid-2007, and its value reached 8105.69 at its highest point. Like most other indices, it was greatly affected by the credit crunch in 2009, falling to 3580 points. Since then, it has rebounded and on September 19, 2013 it closed at its historical record level of 8736 after an impressive 2013 year in which it won more than 1000 points.
The globalization of German companies has been an important growth engine for many DAX companies and has been behind their good results over the years. Companies such as SAP, Henkel, Volkswagen, Adidas and Bayer, among others, have registered impressive growth in the United States as well as in the emerging Asian markets.
DAX historical evolution
Linear graph of a day of DAX behavior from mid 2008 to September 2013.
Items to remember when operating in the DAX
- DAX futures contracts can be traded from 6:01 to 19:59 (GMT), Monday through Friday.
- The DAX moves in sections of 0.50.
- The margin required to operate in the DAX is usually around 2% (that is, a 50: 1 leverage) with most brokers.
- The minimum operation size is 1 index.
- The currency of the DAX is the euro.
Let’s imagine that we want to BUY 1 DAX index, that its value is currently at 8600 and that our trading account is denominated in euros:
The margin (or funds) that we would have to contribute to open that position would be € 172.
(€ 8600 (DAX price) x 2% (required margin) = € 172).
This amount can be seen in the “margin used” section of our trading platform.
If we have an account denominated in another currency, such as the US dollar, our margin will still be 2%, but the platform would automatically convert € 172 to US dollars.
Imagine that the EUR / USD exchange rate is 1,3500. We would see approximately € 232 in the “used margin” section of our dollar account.
The DAX fluctuates in movements of 0.50 cents (euro) so, in our example, if we buy 1 index and the DAX goes up from 8600.00 to 8635.00, we would get a profit of € 35.00 (or $ 47, 25 applying the EUR / USD exchange rate of 1.3500 before).