Deutsche Börse Plans a Second DAX

The Deutsche Börse is preparing to introduce a second stock index alongside the well-known DAX 40. This new version will eliminate the cap on the weight of particularly large companies, offering investors an alternative approach to the German stock market.

A Response to SAP’s Growth

The driving force behind this change is the rapid expansion of software giant SAP, which now holds a significant share of the DAX 40. The company’s market capitalization currently stands at approximately €334 billion. Given that the total market value of all 40 DAX-listed companies is around €1.54 trillion, SAP alone accounts for roughly 21% of the index.

Why a Second DAX?

The current DAX operates under a “capping limit,” which prevents any single company from exceeding 15% of the index. If a company surpasses this threshold, funds that track the DAX must sell shares to maintain compliance. SAP’s recent surge in market value—consistently exceeding €310 billion—has resulted in a sustained breach of this limit. A similar issue previously affected gas giant Linde, which ultimately exited the DAX in 2023 due to these restrictions.

To prevent such scenarios in the future, Deutsche Börse is developing an alternative DAX index that will not impose any capping limits. This new version is expected to be launched in the first quarter of 2025.

Investor Impact

For investors, the introduction of this second DAX could provide an opportunity to invest more freely in dominant market players like SAP. While funds tracking the original DAX will still need to adhere to the 15% cap, the new index will allow for greater exposure to major corporations.

Deutsche Börse’s calculations indicate that risk and return profiles between the two versions should remain largely similar. However, the new index may experience higher volatility due to its greater dependence on a few large companies.