schema:articleBody
| - Germany's blue-chip DAX 30 index will grow by 10 companies and tighten entry rules following criticism over the spectacular collapse of former member Wirecard, stock exchange operator Deutsche Boerse said Tuesday. The changes, which come into effect in September 2021, will raise the flagship index from 30 to 40 members, and require new entrants to have made an operating profit over the last years. They will also be required to publish their audited financial reports. "The comprehensive changes in the index rules were decided to increase the quality of the DAX indices and to align them with international standards," Deutsche Boerse said in a statement. "This is a historic milestone", said independent analyst Timo Emden, and one that is "long overdue" for the Frankfurt index, which was launched in 1988 as Germany's answer to the Dow Jones Industrial Average. The DAX suffered a blow to its reputation after digital payments provider Wirecard in June admitted to a 1.9 billion euro hole in its accounts, and top executives were arrested on fraud suspicions soon after. Wirecard filed for insolvency and its share price plummeted by 98 percent before it was booted off the index, becoming the first DAX company to fail. Deutsche Boerse's chief executive Theodor Weimer has previously made no secret of his desire to expand the DAX, which is smaller than France's CAC 40 or Britain's FTSE 100. The overhaul promises to diversify the DAX. While technology giants such as Facebook, Amazon and Netflix are spearheading the stock market on the other side of the Atlantic, the DAX is still dominated by the auto and chemicals industries. Berlin online fashion brand Zalando, biotech lab Qiagen and fragrance maker Symrise are expected to be included in the expanded index. If they had been implemented sooner, the rule changes would have prevented takeaway provider Delivery Hero from replacing Wirecard on the DAX 30, given that it has never made a profit despite its multibillion euro market capitalisation. The DAX revamp comes after a review launched in the wake of the Wirecard scandal, with more than 600 market players such as banks, fund companies and shareholder associations weighing in, Deutsche Boerse said. Earlier this year, the market operator already made it easier to expel companies from the index in cases of insolvency. The MDax index of medium-sized companies will decrease by 10 to 50 companies as part of the overhaul, Deutsche Boerse added. edf/mfp/rl
|