DAX is the most important index reflecting the state of affairs in the German stock market. DAX includes 30 of the largest German companies by capitalization and turnover. The index value is quoted on the Frankfurt Stock Exchange.
Initially, DAX was the usual German index among many, but after it was used as a benchmark for the state of the German stock market (like the S&P 500 in the USA), its popularity increased sharply.
The DAX Index was introduced in 1988. On the eve of December 31, 1987, its value was set at 1000 points. DAX has historically succeeded the earlier German Börsen-Zeitung stock index.
The DAX Index, unlike the EURO STOXX 50, takes into account not only the price of shares, but also dividends. The DAX Index is calculated based on the prices of shares in free circulation and the capitalization of 30 companies included in it. In the calculation, the Laspeyres formula is used.
In order to become a part of DAX, a company must have at least 10% of its shares in free float. The company must also have official representative offices in Germany, or the main turnover must be made in Frankfurt (in this case, representative offices can be located in any EU country).