Germany's DAX Stumbles As Index Grows From 30 To 40 Firms
Faizan Hashmi 1 month ago Mon 20th September 2021 | 11:47 PM
The DAX fell 2.3 percent on Monday to its lowest level since July, as global market turmoil marred the expansion of the German blue-chip stock market index from 30 to 40 companies
Frankfurt, (UrduPoint / Pakistan Point News - 20th Sep, 2021 ) :The DAX fell 2.3 percent on Monday to its lowest level since July, as global market turmoil marred the expansion of the German blue-chip stock market index from 30 to 40 companies.
The majority of the 10 new companies in the DAX registered drops at the end of the day, with e-commerce company Zalando sinking by over five percent, while the value of the revamped index sat at 15,132.06 points.
During the day, the DAX was briefly down three percent, before recovering later on.
The negative development, indirectly driven by the struggles of Chinese real-estate giant Evergrande, meant the "euphoria around the redesigned DAX has fizzled out after one day of trading", said Andreas Lipkow, analyst at Comdirect.
The new additions are intended to revitalise the index after a turbulent 2020 that saw national carrier Lufthansa drop out under pressure from the coronavirus pandemic and the collapse of payments company Wirecard after revelations of large-scale fraud.
The updated line-up is also meant to reflect the changing face of the German economy, bringing in tech companies like Zalando and the meal-kit supplier HelloFresh.
A number of the companies in the DAX were "founded in the century before last", he said, and younger companies would give the index more "momentum" going forward.
Frankfurt stock exchange operator Deutsche Boerse was "following international standards" with a broader and longer list of companies that better reflected the German corporate landscape as the "concentration of automotive and chemical companies is reduced," Kuhn said.
- New rules - Deutsche Boerse and the DAX suffered a reputational blow last year after digital payments provider Wirecard admitted to a 1.9-billion-euro ($2.2 billion) hole in its accounts.
New rules to better regulate entry into the DAX will be implemented during the expansion, with the aim of preventing another damaging scandal.
In particular, all companies hoping to join the elite will have to demonstrate an operating profit in the past two years -- a test not all current members would have passed were the rules to apply retroactively.