Almost all of the German stock market capital in one index. The Dax is being rebuilt – as a consequence of the Wirecard scandal. In future there will be 40 instead of 30 companies in the German leading index. Is the reform good?
Almost all of the German stock market capital in one index
One thing first: the armaments lobby can take a deep breath. Your member companies are not discriminated against by the new German stock exchange rules as feared. At times, there was talk of excluding companies from the most important Deutsche Börse indices, more than ten percent of whose sales stem from the sale of “controversial weapons”. You can browse here for financial news.
It’s good that it didn’t turn out that way. Because such a »Lex Airbus« might have meant the expulsion of the aviation and armaments company from the MDax and sent a strange message: Investors could not have benefited from the success of a company that is one of the few examples of successful European cooperation and armaments for creates the continent that is growing together. And it should be clear that conventional armaments – not controversial weapons such as cluster bombs or ABC weapons – are needed in an increasingly multipolar world with aggressive players.
All other reform ideas that Deutsche Börse submitted to investors and associations for consultation were accepted by them. Some of it is so banal that one is surprised that it had to be put in writing at all. For example, companies must publish audited annual and quarterly reports and leave the index in the event of violations. Or that they have to form an audit committee on the supervisory board that is supposed to monitor whether the balance sheet is clean and whether the risk management is correct.
Both are a direct reaction to the Wirecard scandal, which embarrassed Germany as a business location, including its stock exchange. However, regularly submitted balance sheets and council committees certified by auditors are no guarantee that there will be no lies or deception. Most of the time, Wirecard reported its business figures in good time during the year or all year round, but they were obviously largely fictitious. It would be more promising to let auditors bleed painfully in the event of misconduct. This is of course the task of the legislature, which is not particularly professional in this regard. It is uncertain what effects the Dax expansion will have on 40 members; the rules will only come into force in September 2021. But it is worrying that 40 companies already cover almost the entire market capitalization of the country. It becomes obvious how few German companies are on the stock exchange and how weak the capital market culture is.