Will Commerzbank soon return to being one of the most important listed companies in Germany?

That can happen.

When the leading German index is reviewed on December 19, the Frankfurt group would have the best chance of returning to the illustrious circle of 40 Dax titles in terms of its market capitalization.

Because if you take the total value of the company's shares in circulation as a benchmark alone, Commerzbank is already one of the top 40 on the German stock exchange.

But that's not quite enough for the leading index.

Daniel Schleidt

Coordinator of the economics department in the Rhein-Main-Zeitung.

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Since the Dax was increased from 30 to 40 stocks and reformed over a year ago, there have been other criteria that companies have to meet to be included.

One of these is still preventing Commerzbank from making a comeback: companies must report an operating profit for at least two years in a row.

The so-called Ebitda of Commerzbank, i.e. its profit before taxes and interest, was still negative in the year before last.

The signs only change with another year of profits.

Wirecard was included in the Dax for Commerzbank

Commerzbank was dropped from the leading index on the Frankfurt Stock Exchange in September 2018 - and replaced by Wirecard, a scandal fintech in Munich that was still celebrated at the time.

For Commerzbank, the descent was a turning point, after all, the Frankfurt group was a founding member of the Frankfurt fever curve.

But is the promotion to the Dax – regardless of the image gain and the self-image of being one of the top stocks on the stock exchange – synonymous with an appreciation of the share?

In a regional context, yes, because German and European investors in particular still like to orientate themselves towards the German premium share segment, explains Sven Streibel, chief share strategist at DZ Bank in Frankfurt.

Despite their international orientation, these index climbers would not necessarily become serious competition on the international stock market.

Dax has lost its importance internationally

The Dax has lost importance internationally over the years, especially in relation to the US market, which is important from a European perspective.

Global economic risks caused prices and thus the market capitalization of the German world export champions to shrink, while the high-growth technology sector is underrepresented, especially compared to the USA.

On the occasion of the first anniversary of the Dax increase, Streibel thought about whether the index had benefited from the increase to 40 stocks.

The result is rather sobering: since the increase in September 2021, the Dax has lost around 8.5 percent.

And if you look at the new stocks, which include Delivery Hero, Zalando,+ Hello Fresh, Puma and Sartorius, these stocks contributed almost half of the total index loss, they are among the main losers in this period.

The shares of Delivery Hero and Hello Fresh both lost more than minus 70 percent of their value, Zalando had to accept a minus of 64 percent.

"Unfortunately, the conversion of the Dax has been a negative business so far," says Streibel.

Dax still recommended in 2023

The equity strategist sees another problem in the composition of the index, especially since the overhaul.

Because while the expansion was primarily intended to bring fresh values ​​into the Dax and weaken the focus on industrial titles, this industrial cluster was, according to Streibel, rather enlarged, for example by the inclusion of Airbus.

This tends to increase the dependence of the Dax on the economy.

"The Dax is extremely dependent on the global economy, especially on the main sales markets of China and the USA." Weaknesses there could also be difficult to compensate for in the new composition.

Concerns about the economy would have ruined the year 2022 for the Dax, and the new entries have so far tended to damage the index overall.

According to Streibel, the Dax is still recommended for investors, he sees his target at the end of 2023 at 15,000 points.

"That's not much from the current status," he admits.

However, in view of the continuing global negative factors, an increase of three to four percent stands for an absolutely average and even decent year for stocks.

Relatively robust profits and a high dividend yield can also be expected for the companies listed in the Dax next year.

The latter in particular act as a buffer in turbulent market phases and are therefore able to reduce possible price volatility.