DAX 30

DAX 30 Index Price analysis

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The DAX 30 is undoubtedly the most followed European stock market index and most representative economy of the Euro zone. It is of course possible to speculate on the actual rate of this index as well as the individual company shares that it is composed of.  But before launching into such a venture it is of course necessary that you are able to analyse movements on the market and complete comprehensive analyses using pertinent information to do so. It is this information that we shall examine here with data on the function and operation of this index, its rate, assets and the analyses you need to complete before trading in it.  

Elements that can influence the price of this asset:

Analysis N°1

Commercial conflicts and customs rate variations on certain products that could impact the German economy.

Analysis N°2

The foreign exchange market as monetary fluctuations could impact the profits of exporters and exert an impact on the rate of these company shares as well as the value of the companies themselves. We would of course prioritise the monitoring of fluctuations in the Euro exchange rate against other major currencies.

Analysis N°3

Sectorial crises, notably in other countries could be a warning of imminent danger for the same sector in Germany.

Analysis N°4

The weight of companies that compose this index is also important as strong variations in these could directly impact its rate.

Analysis N°5

Finally, policy decisions relating directly or indirectly to the country’s economy as well as major exterior events are also important factors to follow.

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General presentation of the DAX 30 German stock market index:

Before anything else, we of course offer you the opportunity to learn more in detail about this stock market index and its general operation and function. An excellent knowledge of the DAX 30 is of course necessary to understand how its rate could move over the medium or long term.

The DAX is a stock market index that was created directly by the Frankfurt stock market. It should be remembered that this stock market is the most important in Germany as well as the tenth largest financial marketplace worldwide. It was on the 30th December 1987 that this stock market index was created with an initial quotation of 1,000 points. Another particularity of the DAX 30 index is that it is the oldest European stock market index on the worldwide financial markets.

In fact, the DAX 30 stock market index was created in the 1980s to replace an older index, the  Börsen Zeitung, which was itself originally created by a German financial newspaper in 1959.

Later on and indeed over time, the Deutsche Böerse which operates the DAX has added other indices to the major index which is the DAX 30. For example there is the MDAX which lists the 50 largest German companies after those of the DAX 30, and the TecDAX, an index that lists the 30 top German companies specialised in the technology sector similar to that of the American Nasdaq index.

Some information relating to the German market is also important to know, particularly as Germany is the premier economic power in Europe and the fifth leading economy worldwide. This is notably due to the companies that are included in the composition of the DAX 30 stock market index which alone represent over 75% of the total stock market capital of the Frankfurt stock market. This information indicates why this index arouses such interest on the markets.

 

What is the composition of the DAX 30 stock market index?

As indicated by its name and as we mentioned earlier, the DAX 30 stock market index is composed of the 30 largest companies on the German stock market in terms of stock market capital. We can therefore note companies from various activity sectors.  Contrary to what many may think, and although the German economy is often associated with the automobile industry, the companies found at the top of this classification are in fact companies related to the chemicals industry such as the Bayer Group and the BASF Group. Of course, the automobile manufacturers such as Daimler, BMW and of course Volkswagen are also present with strong positions in this index classification.

We would also note here that although the volatility of the DAX 30 index is particularly high the index comprises companies that are also particularly resistant. We also know that among the 30 companies that are included in this index, 17 have been included since its creation in 1988.

Here is a list of the companies included in the DAX 30 index at the beginning of 2021 with the respective weight of each:

Of course, the composition and classification of the DAX 30 index will and does change over time as certain companies exit the index and are replaced by others depending on their stock market capital.

 

What is the method used for the calculation of the DAX 30 index rate?

To further develop your knowledge we will now provide explanations on how the DAX 30 index rate is calculated.

Firstly, it is important here to remember the criteria necessary for a company to be included in the composition of this index. In fact to enter the DAX 30 index a company must be quoted on the Prime Standard sector of the Frankfurt stock market. It should also have at least 15% of its shares quoted on the stock market and held by the state and finally, it should have been listed on the stock markets for at least three years.

In order for a company to exit the composition of the DAX 30 index it will need to fall to at least 45th place in the classification in terms of stock market capital. Of course, a company that becomes bankrupt will also exit this index. It should also be remembered that every quarter, the German stock markets committee meets to discuss the admission and exclusion of companies in the DAX 30 index depending on the stock market capital and order volumes of the latter.

Regarding the actual calculation of the DAX 30 this depends on the stock market capitals of the companies and uses a methodology based on the floating principle which only takes into account the shares that are truly available. It should also be noted that each of the companies that is included in this index cannot account for more than 10% of this index.

 

Some information you should know before analysing the DAX 30 rate:

Before starting your analyses of the DAX 30 rate it is also necessary to know certain particularities and characteristics of this asset. In fact, it is not possible to buy parts of the DAX 30 in the same way you purchase shares on the stock markets and speculation on this asset is therefore completed through derived financial products.

It is also very important to note here that the DAX 30 Index displays a particularly high volatility, even higher than certain other international stock market indices. This therefore represents a risk for investors that should be taken into account. It should also be remembered here that historically the DAX 30 experienced a period of major growth during the initial years following its introduction onto the stock markets, passing the 2,000 points level in 1993 and increasing to 5,000 points to 1998 and finally 7,500 points in 2000. Between 2003 and 2007 the rising market enabled this index to reach its peak of 8,105.69 points.

Still from a historical point of view, we would also note that the DAX 30 has been particularly impacted by the speculative bubble at the beginning of the 2000 decade with a falling market over three years which led to a renewed drop of this index to 2,500 points with a gradual recovery since then.

The strong growth of certain German companies that are included in this index are responsible for this high volatility and should therefore be closely monitored.

Frequently Asked Questions

What are the trading hours on the DAX 30?

It is possible to trade on the DAX 30 stock exchange index during the opening hours of the German stock exchange. Until 8:50 am, this is the pre-trading period which is followed by the auction phase where orders are stored and exchanged in one go between 8:50 am and 9:00 am. From 9:00 am to 1:00 pm, this is the continuous trading phase with an immediate match between supply and demand. Between 1:00 pm and 1:02 pm, an auction phase stores the orders that are exchanged in one go. Between 13:02 and 17:30, a new phase of continuous trading is followed between 17:30 and 17:35 by a new auction phase. Post-trading takes place after 17:35.

What is the calculation method applied to the DAX 30?

To calculate the price of the DAX 30 stock market index, a calculation is made that reinvests dividends and other bonuses paid to shareholders, which is not the case for other indices such as the CAC 40 for example. The formula used to perform this calculation is the Laspeyeres formula. You can find more details on this subject online.

The different ways to invest in the DAX 30?

There are different ways to invest in the DAX 30 stock market index. You can choose to invest through futures and options contracts listed on the EUREX, invest through CFDs or contracts for difference, invest through Trackers which are offered by issuers or by using stock exchange products such as Warrants and Turbos.

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