HelloFresh, Zalando to Join DAX in German Benchmark Revamp
Germany’s biggest stock index is getting a growth-centric makeover as the industrials-heavy DAX undergoes the biggest revamp since its inception in the late 1980s.
Online fashion retailer Zalando SE and meal-kit supplier HelloFresh SE are among 10 new companies set to join the benchmark, part of an effort to bringing an infusion of high-octane constituents to the gauge. Other stocks that will make up the expansion to 40 members are Siemens Healthineers AG, Sartorius AG, Porsche Automobil Holding SE, Symrise AG, Airbus SE, Puma SE, Brenntag SE and Qiagen AG.
“I do like the redesign of the DAX,” Comdirect Bank strategist Andreas Lipkow said before the announcement. “It offers a fresh taste and adds a little bit of a different DNA to the benchmark.”
The overhaul, announced late Friday in Germany by compiler Qontigo, a subsidiary of Deutsche Boerse AG, marks the final step in a series of changes to strengthen the benchmark and make it better reflect the nation’s corporate landscape. The revision was sparked by the collapse of Wirecard AG a year ago -- the first DAX member to file for bankruptcy. DAX companies are now required to publish quarterly statements and audited annual results, with a fast exit for those who fail to do so.
When the changes go into effect on Sept. 20, exchange-traded funds that track DAX indexes will be among those to see the greatest immediate impact. Bloomberg Intelligence estimates that ETFs with about $19 billion in assets will have to shift their investments.
The revamp will add about 350 billion euros ($416 billion) to the gauge’s market value, according to asset manager DWS Group. It also will dilute the prominence of dividend-paying stocks such as BASF SE.
The changes “could help the DAX to gain more attention from international investors,” DWS portfolio manager Christoph Ohme said before the announcement. The index will also gain variety with the addition of firms in sectors such as e-commerce and medical technology, he said.
Qontigo also announced regular changes of constituents in the MDAX and SDAX Index.
“We are completing the biggest DAX reform in our history, manifesting the DAX as the German blue chip index, which will represent a larger spectrum of the German capital market,” said Stephan Flagel, chief product officer for indices and benchmarks at Qontigo.
The DAX fell 0.4% on Friday after disappointing jobs data out of the U.S., leaving it up 15% this year. DWS predicts the index can gain another 5.8% to 16,700 over the course of the next 12 months. The German benchmark has underperformed European and U.S. indexes over the past year.
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