Currently, the DAX® index has been the best-known German stock market barometer for 35 years and measures the performance of the 40 largest companies on the German stock market. It represents around 80 percent of the market capitalisation of listed stock corporations in Germany. The occupation is constantly changing. There were beginners and descendants, as well as outgoers, as a company lost its independence and thus its place in the DAX through an acquisition. Since the end of the first trading day on July 1st, 1988, the DAX recorded an increase of 1288%. This corresponds to an annual return of 7.8%. The DAX also surpassed the global MSCI World stock index; in the same period, the MSCI World earned 1170%, including all dividend payments.
Of course, it didn’t always work for the DAX. Massive losses have also been felt during the major world crises. For example, the German stock index experienced strong falls during the 2008 world economic crisis or the World Trade Centre events in 2001.
Confidence Crisis after the Wirecard Scandal
According to the German news channel ZDF, the lead index was raised from 30 to 40 in 2021 because it has been repeatedly noted over time that 30 companies do not adequately represent the German economy. More values would also reduce the DAX’s vulnerability to fluctuations. It was only the scandal surrounding the listed financial service provider Wirecard (long years of misleading accounting and criminal practises that led to bankruptcy) that forced investors to consider this. The decision of the Deutsche Börse is to increase the number of securities to 40 while at the same time tightening the provisions for inclusion in the renowned lead index. The Wirecard scandal also led to a crisis of trust in the DAX.
When the DAX was founded in 1988, the stock barometer started at 1,000 points. Just before he was 35. On his birthday, the DAX reached an all-time high. In trade, it reached, on June 16th, 2023, almost 16.427 points. However, since 2008, there has been no new record for the highest daily profit. On October 3rd, 2008, the DAX recorded the highest daily profit in its history, with 11.4%, which has not been surpassed so far.
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Two things are unquestionable for Theodor Weimer, chairman of Deutsche Börse AG. “The DAX as an international leading index has its right to exist, and a good index will continue to evolve over time,” he told ZDF.
