Germany 40

The DAX is a capitalisation-weighted index, meaning that companies with a higher market cap will have a bigger influence on its price. It’s calculated using a free-float methodology, which means it only takes the number of readily available shares into account – ignoring those that can’t be bought and sold (such as those held by government). To avoid domination, a single stock cannot represent more than 10% of the index.

Prices are calculated every second, and companies are added or removed quarterly on the basis of their market cap and the size of their order book.

The DAX is a capitalisation weighted index made up of 30 of the biggest, most liquid constituents of the Frankfurt Stock Exchange (FSE). The companies that make up the index represent about 75% of the total market cap of the FSE.

The DAX was launched by the Frankfurt Stock Exchange in July 1988, with a base value of 1000. The index was created as a continuation of the Börsen-Zeitung, an index started in 1959. One of its first big milestones was the 60% increase in the run-up to the destruction of the Berlin Wall in 1989. But, with tensions rising, the price began to fall again – losing 13% in seven weeks.

Despite the happenings in Germany, the index posted strong growth in its first few years, surpassing 2000 points in 1993, and 5000 in 1998. By early 2000, it showed a 27% increase in just ten weeks – mostly attributed to the high demand for tech stocks. This was the first time the Germany 40 passed the 7500 mark.

The dot-com crash had an adverse effect on the index, pushing the price to below 2500 by 2003. After the market settled, it managed to get back above the 7500 level once more, before the 2008 economic meltdown caused it to lose more than half its value. However, the Germany 40 proved to be resilient and made a comeback once again, breaking the 12,000 level in 2015.