Porsche is soaring beyond the DAX index

In a significant shake-up of the German economy, Porsche AG and Sartorius have announced their departure from the Dax, the flagship index of the German stock market. This change will take effect on September 22.

Porsche, the renowned sports car manufacturer, has seen its share price drop from an initial 82.50 euros to around 45 euros, a significant decrease that has been attributed to various factors including the weakening Chinese market, problems with the sale of electric cars, and the trade dispute with the USA.

The company is now focusing on savings to improve its financial situation. Despite this setback, Porsche Automobil Holding SE remains in the Dax and is the largest shareholder of the carmaker VW with 31.9 percent. It also holds about one-eighth of Porsche AG.

Sartorius, a pharmaceutical and laboratory supplier, has also been affected by market fluctuations. After benefiting from strong demand for its products during the corona pandemic, particularly for the production of vaccines, the company has suffered from the fading boom, high customer inventory levels, and a weak market in China. As a result, Sartorius shares have halved in value in just three years.

The departure of Porsche and Sartorius from the Dax paves the way for Scout24 and Gea to join the index. Scout24, a digital marketplace for real estate, and Gea, a global provider of technologies for a sustainable food processing industry, will bring new dynamics to the Dax.

Changes in the Dax usually do not have long-term effects on share prices. However, index changes can have an impact on share prices, particularly for index funds (ETFs) that directly and one-to-one replicate the Dax.

Membership in the Dax or MDax brings prestige and more visibility to international investors. A demotion from the Dax is not a one-way street, as shown by the example of Commerzbank, which managed to return to the leading index after being expanded from 30 to 40 values.

The German Stock Exchange reviews the composition of the Dax and other indices, such as the MDax, quarterly. The quarterly review ensures that the indices remain representative of the German economy and reflect the current market situation.

The descent of Porsche is symbolic of the crisis in the German automotive industry, which is struggling with falling profits. However, the departure of Porsche and Sartorius from the Dax does not necessarily indicate a long-term decline for these companies. Instead, it represents an opportunity for them to restructure and regain their footing in the market.

In September 2023, GEA Group and Scout24 were admitted to the DAX index, replacing Porsche and Sartorius which were removed due to declining market capitalization and share price performance. The future looks bright for these new additions to the Dax, and the German economy as a whole continues to be a powerhouse in the global market.