Frankfurt Stock Exchange

DAX
Long name	Deutscher Aktienindex DAX
Owner/publisher/sponsor	German Stock Exchange
Number of constituents	30 German companies
Construction principle	Capitalization-weighted total return Laspeyres index
Base date/base value	December 30, 1987 / 1,000.00
Interval of calculation	1 minute
Source: German Stock Exchange, 1996.

Being conceived as the leading German stock index, at its introduction in 1988 the DAX was the only representative of what during the subsequent years became a family of stock market indexes. Besides the DAX the German Stock Exchange publishes the IBIS-DAX which is a calculation based on the early-morning opening (that is, the pre-physical market trading) and late-afternoon close (that is, the post-physical market trading) of the 30 DAX stocks in the IBIS electronic trading system. In addition, the German Stock Exchange index family now comprises the DAX 100, the midcap index MDAX, and the Composite DAX (CDAX) which is subdivided into 16 branch indexes (German Stock Exchange, 1996).

By chain-linking the DAX to the Börsenzeitung-Index (BZ-Index), the DAX can be traced back to 1959. Since the DAX is constructed as Laspeyres type index, to counteract the obsolescence of the index sample the base is annually recalculated and the new series of index numbers is spliced to the previous one. It is the merit of the DAX that it paved the path for the concept of a total return index to be accepted as a benchmark for the price development on a major stock exchange. Furthermore, the DAX was the first performance index ever that served as an an underlying for derivatives trading.

The index sample of the DAX is selected according to the following six criteria:

• generally a company needs to be listed for at least three years prior to the inclusion of its stock in the DAX;
• the free-floating capital must at least reach 15%;
• turnover;
• market capitalization;
• availability of early opening prices, and
• branch representativeness for the German economy.

The DAX 100 has been created to meet investors' and portfolio managers' demand for a broad based index which combines the virtue of high liquidity and high market capitalization with a better risk diversification. The base date of the DAX 100 is December 30, 1987 with a base value of 500. In analogy to the DAX 100 the German Stock Exchange publishes a DAX 100 price index (HKDX).

The DAX 100 stock sample minus the DAX stock sample constitutes the MDAX. The MDAX therefore represents the highly liquid stocks of the official market segment without the blue chips. Its base value was set to 1000 on December 30, 1987. The sample of index stocks of the CDAX comprises all, currently about 350, stocks traded on the official market of the Frankfurt Stock Exchange. The base date is the same as for the DAX and the DAX 100 but the base value is 100.

The DAX fell to its historic low on January 28, 1988, with a value of 931.18.

References:

German Stock Exchange (1996): Leitfaden zu den Aktienindizes der Deutsche Börse AG, German Stock Exchange: Frankfurt/Main.

DAX: German Stock Exchange, Frankfurt. Text: Institute for Advanced Studies, Vienna, 1996. All rights reserved.

This page is a part of the European Stock Market Indexes Website of the Institute for Advanced Studies in Vienna, Austria. Text by Christian Helmenstein. No part of this page or the European Stock Market Indexes Website may be reproduced, stored in a retrieval system, or transmitted without the prior permission of the copyrightholder(s), subject to the exceptions provided for by law. In any case, proper reference would run: "European Stock Market Indexes Website, Deutscher Aktienindex DAX, Institute for Advanced Studies, Vienna (http://www.ihs.ac.at/fin/finix/direct.html)." For further information on stock market index construction principles (NOT: data sources etc.) contact the IHS Financial Indicators Research Group. No liability assumed.

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