Major changes are expected in the Dax 40 in September. This is because the latest review of the leading German index is coming round again. The precisely defined criteria in the Dax rules and regulations will allow for more promotions and relegations than in the last review – when only a so-called „fast entry“ and „fast exit“ was possible, and the hurdle for changes significantly higher.

And what is expected to happen in the Dax in September is quite something. „It is highly likely that Porsche AG preference shares will be dropped from the Dax,“ explains index expert Achim Matzke from Matzke-Research in an interview with Börsen-Zeitung. But not only the Dr. Ing. h.c. F. Porsche AG preference shares with the conspicuous stock exchange abbreviation „P911“ are in danger of dropping out of the top league. The preference shares of Porsche Automobil Holding SE are also threatened with relegation to the second division. The SE owns the majority of Volkswagen ordinary shares.

Not only Matzke, but also index analyst Pankaj Gupta from J.P. Morgan, comes to the conclusion that Porsche will be relegated twice. According to the calculations of the two index experts, Porsche AG preference shares and Porsche Automobil Holding SE preference shares would be replaced by the internet portal operator Scout24 and the mechanical engineering company Gea.

According to Matze, Lufthansa, software developer Nemetschek and defence supplier Renk also have a chance of being promoted. However, one of these stocks could only move up if there is also a relegated stock. This could be Sartorius preference shares. For this to happen, however, the share would have to be ranked 48th or lower in the Dax ranking list. If, on the other hand, Sartorius preference shares make it to 47th place in the corresponding ranking list, they will remain in the Dax in any case.

According to Matzke, further changes in the Dax are imminent if the automotive supplier Continental is split up. However, this is unlikely to happen before September. Another Continental stock could then be promoted to the Dax.

Stoxx, a subsidiary of Deutsche Börse, has defined the criteria for promotion to the Dax and relegation from the top league in a precisely described rule book. There is no more room for discretionary decisions.

The decisive factor for promotion and relegation is a share's position in the Dax ranking list. This is calculated on the basis of the market capitalisation of the free float of a share. According to Matzke, the ranking calculated in August from the last 20 trading days is decisive. The relevant period this year was therefore from 4 to 29 August.

Regular promotion to the Dax is possible for shares that are ranked 40th or higher in the DAX ranking list. However, this also requires a relegation candidate that is lower than 47th place. Without a corresponding relegation candidate, there is no change in the leading German index in the so-called „regular entry“.

Of course, the free-float market capitalisation of the individual shares can still change significantly in the coming weeks. The relegation of the two Porsche shares is therefore not yet sealed. However, the Dr. Ing. h.c. F. Porsche AG preference shares are currently a distant 52nd in the Dax ranking according to Matzke's calculations. It therefore seems unlikely that the „P911“ will manage to remain in the Dax after all.

In any case, the performance of the Porsche AG preference share, which went public in September 2022 with much advance praise, is tragic. The issue price at the time was 82.50 euros. It subsequently rose to 120 euros in spring 2023, but the share price then plummeted and is currently trading at less than 44 euros. Shareholders who bought into the stock market newcomer back then and still hold the share today have lost almost half of their investment.

The performance of the Porsche Automobil Holding SE preference share, which was promoted to the Dax in September 2021 as part of the expansion of the index from 30 to 40 shares, has also been severely disappointing in recent years. According to Matzke's calculations, this Porsche share is also in a relegation position at 50th place. However, it has an even better chance of moving up to 47th place and thus avoiding relegation.

Things are likely to get interesting for Sartorius preference shares, which are currently in 48th place and in a relegation zone. However, according to Matzke, Sartorius preference shares and Thyssenkrupp (ranked 47th) are virtually on a par in terms of market capitalisation. The race therefore seems to be wide open as to whether Sartorius preference shares will manage to stay in the Dax or not.

In any case, there are plenty of potential climbers to the Dax. These include the digital company Scout24, which operates the online marketplace ImmoScout24, in 34th place. The share, which has been listed on the MDax since June 2018, has recently made significant gains and, according to Matzke, has an medium-term bullish trend.

The Gea Group is also well positioned for a move up the Dax. The shares of the global technology group have risen sharply since last year. Lufthansa is also back, already in 38th place in terms of free float market capitalisation, and could therefore end up in the Dax in the near future.

However, the software company Nemetschek follows directly behind Lufthansa in 39th place. This share has been a real wealth creator in recent years. And another software company alongside SAP would look good on the Dax. Renk has outsider chances as a defence stock, currently ranked 46th. However, the share price would have to rise significantly for this to happen.