The DAX 40 is a stock market index representing Germany's 40 largest and most liquid companies listed on the Frankfurt Stock Exchange, such as SAP. Often referred to as a barometer of the German economy, it provides investors with exposure to some of Europe and Germany's most established and influential corporations.
Unlike indices weighted by price, the DAX 40 is market-capitalisation-weighted, meaning larger companies within the index have a greater impact on its overall performance. As a result, it offers a wide representation of the German blue-chip landscape. This index is widely used as a benchmark for German and European equities, making it a crucial tool for investors seeking exposure to the German market.
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While the DAX has declined more recently (also on August 9, 2024), reflecting broader concerns about growth, the index has been rising over the last few years, with a run that stretches back all the way to October 2022 (with a couple of notable pullbacks in between).
Over the last 12 months, the index has gained over 11%.
DAX 40 – Daily Movers
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Various Ways To Trade The DAX
The DAX 40 index is most commonly traded in Germany, Austria, and Switzerland but the global interest in the DAX remains strong.
For those with shorter-term horizons, the DAX is most commonly traded via leveraged products such as futures, options, or CFDs. You cannot buy the DAX 40 index as you would a direct stock, so ETFs remain the most popular investment angle for those with long-term durations in mind.
The majority of the process involved in accessing indices is similar regardless of where in the world you are, but there are some nuances on a country level. Account types, tax treatment, or local regulations playing the biggest differentiator between global access to the market, with CFDs not an authorised product in US markets as one notable example.
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DAX 40 Price Forecast
The DAX 40 is a benchmark index representing Germany's 40 largest and most liquid companies. As a bellwether of the German economy, its performance is closely watched by investors worldwide.
The Bull Argument: Several analysts remain optimistic about the DAX 40's prospects. Analysts have previously highlighted Germany's industrial prowess and its role as a beneficiary of the global green energy transition as bullish factors for the index. In addition, some are confident in the DAX 40's ability to outperform other major European indices, while the resilience of German companies is seen as a supportive factor.
The Bear Argument: Despite these bullish views, headwinds do exist. Concerns about a potential recession in Europe and the ongoing geopolitical tensions have cast a shadow over the market. Some analysts have warned of a potential correction in the DAX 40 due to valuation concerns.
In an early July article, Fawad Razaqzada, an analyst at City Index, said the DAX was “holding comfortably above its 200-day average and around its short-term 21-day exponential. The minimal pullback from the May all-time high and subsequent consolidation indicates readiness for another upward move.”
Top 10 DAX Companies By Market Cap
The index is updated twice a year inMarch and September.
| Company | Market Cap (As of August 10, 2024) |
|---|---|
| SAP | €222.81 Billion |
| Siemens | €124.15 Billion |
| Deutsche Telekom | €122.52 Billion |
| Airbus | €106.34 Billion |
| Allianz | €100.17 Billion |
| Merck KGaA | €72.23 Billion |
| Mercedes-Benz | €61.84 Billion |
| Porsche | €60.41 Billion |
| Munich RE | €58.15 Billion |
| Siemens Healthineers | €56.19 Billion |
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Why Buy into the DAX
The DAX 40 is composed of Germany’s largest and most established companies, offering a unique investment profile compared to other markets. Here are the investor characteristics that align well with the index:
European Economic Exposure: Investors seeking exposure to the robust German and broader European economy will find the DAX 40 a suitable choice. Germany is a key driver of European economic growth, and the DAX 40 provides a concentrated bet on this region.
Dividend Income Seekers: Many DAX 40 companies have a history of consistent dividend payments, making the index attractive to investors seeking regular income.
Long-Term Investors: Given the stability and resilience of German companies, the DAX 40 can be a core holding for investors with a long-term investment horizon. It has historically demonstrated the ability to weather economic storms.
Risk-Managed Investors: While not without volatility, the DAX 40 is generally considered less volatile than smaller-cap indices. As such, it can be a suitable option for investors seeking a balance between growth and risk management.
Quality and Stability Seekers: The DAX 40 is composed of established, financially sound companies with strong market positions. Investors prioritising quality and stability over high growth potential may find the DAX 40 appealing.
Indices – Daily Movers
