From Herbert Rude
FRANKFURT (Dow Jones) – It is not a premiere when the DAX and the Euro-Stoxx-50 are each calculated with an additional share on September 28th. The reason is the spin-off of the Siemens energy division. Siemens Energy will then be included in the two blue-chip indices for one day. The DAX will then contain 31 stocks, the Euro-Stoxx-50 accordingly 51 stocks.
In the past, this had already been the case at Osram, Uniper and Lanxess, for example. The reason for this is the set of rules for the two indices that provide for this method in the event of a spin-off.
According to the index operator Stoxx, the inclusion of Siemens Energy in the DAX for one day ensures that the index can be represented by investors. Inclusion in the index occurs with a price of zero. The free float factor and the number of shares with which Siemens Energy AG will be included in the index are determined by the Siemens AG share in the index and the spin-off ratio.
However, the spin-off mainly offers the spin-off company, in this case Siemens AG. The exchange-traded DAX funds (ETF) will sell the shares of Siemens Energy as passive investors on Monday evening at the closing price. These will then initially no longer be included in any index because they will only appear on the Deutsche Börse ranking lists for the indices after 30 trading days and only then can they qualify for inclusion in the index. The DAX ETFs will reinvest the sales proceeds in the shares of the parent company, in this case in Siemens shares. This creates additional demand.
However, this is only of a temporary nature. Because on December 18, the DAX will be re-chained to the closing price, i.e. the weights of the individual members will be adjusted again. Then Siemens is reset to the weight without Siemens Energy, so to speak. The ETFs will therefore also surrender their “surplus” Siemens shares.
In the Euro-Stoxx-50 everyone benefits from the reset to 50 titles
Commerzbank Technical Analysis and Index Research points out that the handling in the Euro-Stoxx-50 differs from that in the DAX. Should the spin-off title be in the first 40 places in the ranking on the evening of the first day of trading, it would replace the smallest company in the Euro-Stoxx-50. But that is usually not the case.
When the spin-off index was withdrawn on the evening of the first day of trading, ETFs then sold the spin-off as in the DAX. They then invested the money not only in the shares of the parent company, but also proportionally in all remaining Euro-Stoxx-50 members according to their index weighting.
DJG / game / gos
(END) Dow Jones Newswires
September 23, 2020 05:27 ET (09:27 GMT)
TRADE FOREIGN EXCHANGE WITH UP TO LEVER 30 NOW
Trade forex with high leverage and small spreads. With only € 100.00 you can benefit from the effect of € 3,000 in capital.
76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford the high risk of losing your money.