Shuffling of the DAX: Covestro's Exit and Fresenius Medical Care's Return
Covestro departs from the Dax index, while Fresenius Medical Care ascends to a prominent position
In a surprising shift, Covestro will depart from the DAX effective December 27. Stoxx, a subsidiary of Deutsche Börse, confirmed the news, revealing that Fresenius Medical Care (FMC) will reclaim its spot in the DAX.
The decisive factor behind this remarkable shake-up in the German leading index stems from Covestro being taken over by the Abu Dhabi National Oil Company (ADNOC), now known as XRG. This takeover has propelled XRG to own an astounding 91.3% of Covestro's shares, effectively shattering the plastics company's free float of at least 10%. Consequently, the plastics giant no longer complies with the DAX's criteria.
The expectation of Covestro's exit and Fresenius Medical Care's return to the first league aligned with forecasts made by index analysts. This change will free up a spot in the MDAX, which will be filled by Deutsche Wohnen. Simultaneously, LPKF Laser & Electronics will move into the SDAX. All changes will be effective on December 27, according to Stoxx announcements.
The impending regular review of DAX indices is scheduled for March, based on the February ranking of index values. Subsequent changes in the Deutsche Börse's selection indices could be on the horizon. For instance, the question lingers whether the market capitalization of the free float of preferences like Porsche SE preference shares or Sartorius preference shares will suffice to maintain DAX membership. As the end of February approaches, market prices can still undergo significant fluctuations.
Insight: Covestro's expulsion from the DAX in December 2021 was due to its failing to meet the free-float criterion, a requirement for companies to have a certain percentage of shares freely available on the market. This criterion is vital for maintaining a company's membership in the DAX, as it ensures a balance between market participation and corporate control.
Insight: Following the changes in December 2021, European markets exhibited volatility in March 2022. Broader factors, such as geopolitical tensions and economic uncertainties, likely played a more significant role in shaping the DAX's performance during this period, rather than internal composition changes. Nonetheless, the impact of the December composition changes on the DAX in March 2022 is not explicitly outlined in available search results.
- Covestro's departure from the DAX, due to falling below the free-float criterion, created a vacancy in December 2021 that was filled by Fresenius Medical Care.
- The exit of Covestro from the DAX and the return of Fresenius Medical Care led to Deutsche Wohnen entering the MDAX and LPKF Laser & Electronics moving into the SDAX.
- The forthcoming review of DAX indices in March 2022, based on the February ranking of index values, may bring more changes to the Deutsche Börse's selection indices.
- The question remains whether the market capitalization of the free float of preferences like Porsche SE preference shares or Sartorius preference shares will still meet the criteria for maintaining DAX membership as the end of February approaches.
