FRANKFURT (AFP) – The DAX fell 2.6 per cent in early trading yesterday to its lowest level since July, as market turmoil marred the German blue-chip stock market index’s expansion from 30 to 40 companies.
The majority of the 10 new companies in the DAX were down shortly after 1100 GMT, with aerospace giant Airbus and e-commerce company Zalando both sinking around four per cent, while the value of the revamped index sat at 15,080 points.
The negative development, driven indirectly 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, an 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.
Both companies have benefitted from people staying at home more during the pandemic, buying clothes online and ordering in food. The newcomers make the DAX “more attractive”, said Norbert Kuhn from the German Stock Institute (DAI), which represents stock market participants.
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.