Shuffle in the DAX: Covestro's Departure and Fresenius Medical Care's Return
Covestro departs from DAX, Fresenius Medical Care ascends to prominence in the index
Stirring up the DAX, Covestro gets the bum's rush due to abiding by the "less is more" rule, whilst Fresenius Medical Care makes a triumphant comeback. The announcement by Stoxx, a subsidiary of Deutsche Börse, pegs December 27 as the day Covestro sails out of the DAX, owing to its shares being primarily held by the petroleum titan Adnoc, now christened XRG, which owns an impressive 91.3% of Covestro's shares and doesn't meet the minimum free-float (float) criterion of 10%.
Covestro's share drop in the DAX was a foreseeable outcome of the takeover. Simultaneously, the exit makes way for Fresenius Medical Care to take its place in the top echelon of stock exchanges. As Fresenius Medical Care climbs back up the ranks, Deutsche Wohnen will fill the void left in the MDAX, and LPKF Laser & Electronics will step into the SDAX. All changes are set to go into effect on December 27, as Stoxx has announced.
The next major review of the DAX indices is penciled in for March, based on the February ranking of index values. The reshuffling in the Deutsche Börse's selection indices may not end here, with analysts anticipating potential challenges for Porsche SE preference shares and Sartorius preference shares to maintain their DAX membership due to the market capitalization of their free float values. However, fluctuation in prices between now and February's end could alter the landscape.
DAX Membership: The Inside Scoop
Criteria for DAX Membership
Being a part of the DAX index demands compliance with essential criteria:
- Listing Requirement: The company must be listed on the Frankfurt Stock Exchange's Regulated Market (FWB).
- Continuous Trading: Shares must be actively traded to guarantee sufficient liquidity and fair pricing.
- Size & Liquidity: Membership usually demands that the company is among the largest and most liquid in the German market.
Note: The DAX consists of the 40 largest and most actively traded companies listed on the FWB (based on market capitalization and order book turnover via Xetra trading system). The specific criteria are subject to regular review, but the above reflects the recent, publicly available information from the index provider.
Exiting the DAX
- Delisting: If a company is unlisted or stops trading, it gets booted from the DAX.
- Mergers & Acquisitions: If a company merges or gets bought out, it may lose its independent status, subsequently being removed.
- Performance Slump: Companies no longer meeting the minimum requirements in size, trading volume, or market capitalization compared to competitors may face demotion during routine reviews.
- Regulatory Woes: Severe regulatory or legal problems can lead to removal if they impact the listing status or market confidence.
Summary Table: DAX Membership Criteria and Reasons for Exit
| Criteria/Reason | Description ||----------------------|-----------------------------------------------------------------------|| Listing on FWB | Must be listed and traded on Frankfurt’s Regulated Market || Continuous Trading | Shares must be continuously traded for liquidity and fair valuation || Market Size & Liquidity | Must remain among the top 40 largest/most liquid German shares || Exit: Delisting | Company is delisted from the exchange || Exit: M&A | Company merges or is acquired, losing independent status || Exit: Poor Performance | Falls below DAX entry requirements in size, market cap, or turnover || Exit: Regulatory Issues | Severe legal/regulatory problems affecting listing or market trust |[1]
Note: Exact thresholds and review mechanisms can be found in the official STOXX/DAX methodology documents. The above encapsulates the most pertinent and current information available for May 2025[1].
- Given Covestro's shares are primarily owned by XRG, which doesn't meet the minimum free-float criterion of 10%, it was expected that Covestro would exit the DAX due to the 'Delisting' criterion for leaving the DAX.
- As Fresenius Medical Care returns to the top echelon of stock exchanges, it showcases a successful investment opportunity in the 'business' sector, highlighting the potential for growth and profit within the 'investing' landscape.
