Frankfurt stock market index celebrates 20 years in business
Much has changed at the Frankfurt stock exchange in 20 years but as its Dax index celebrates the milestone it remains the barometer for German economic well-being.
"Back then, there was more shouting, more people on the floor. We yelled at each other but when it was over we would go have a beer together," remembers Dirk Mueller, a Frankfurt broker who remembers how it was before computers moved in.
Today, a studious calm prevails over the market's dark wood floor, with traders focused on video monitors and only rarely looking up to check where the index of German blue-chip stocks is headed.
The Dax, which was launched on July 1, 1988, has a new face as well.
Though it still represents the 30 biggest capitalised German companies, only 17 of the original groups remain, including insurance group Allianz, Deutsche Bank and car makers BMW and Volkswagen.
"Banks and service providers have gained importance, along with energy companies," said Mueller, known to German media as "Mister Dax."
The power giant EON and even the stock market operator Deutsche Boerse itself are among the newcomers.
And more than half of the listed capital is owned by foreigners.
Like other market indices, the Dax is "a reference value" that measures the state of the German economy, Mueller explained.
Introduced as computers were beginning to revolutionize stock trading, within a few years changes in the Dax and its component companies were accessible to brokers in real time.
Since 1999, the market's Xetra trading platform is the sole source for fixing prices of Dax-listed companies.
The index itself has seen both good and bad times since it was introduced with a reference value of 1,000 points set according to the listed companies stock prices on December 30, 1987.
When the index was unveiled six months later in a country still divided between east and west, it had already risen to 1,163 points.
A year later however a mini crash rocked Wall Street and in October 1989, the Dax lost 12.8 percent in one day, its biggest single loss ever.
Three years on it was still below 2,200 points, after the Internet bubble burst and terror attacks hit the United States on September 11, 2001.
When the Frankfurt exchange closed on Monday, the Dax stood at 6,418.32 points.
Even major political events have had less impact on the market than long-term trends like rising oil prices or China's economic development.
Mueller regrets however that the market has now become disconnected from the broader economy.
"The financial world has become an end in itself. It is no longer a question of underpinning the economy" by helping to finance businesses, he said.
Instead, the stock market has turned into a "casino."
Established markets must also compete now with trading platforms created by groups of banks, and the competition will be tough, "Mister Dax" forecast.
"We will also lose transparency," he warned.
AFP
