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 XETRA-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 XETRA 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.
Since the DAX is constructed as a 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 underlying for derivatives trading.
The index sample of the DAX is selected according to the following 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%
- market capitalization
- branch representativeness for the German economy.
By chainlinking the DAX to the Börsenzeitung-Index (BZ-Index), the DAX can be traced back to 1959.
Deutscher Aktienindex, DAX, Deutsche Börse Group (German Stock Exchange). Text: Institute for Advanced Studies, Vienna, 1998. All rights reserved.
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