Germany's most valuable financial services provider is probably not one you have heard of. But it just overtook Deutsche Bank and looks set to relegate Commerzbank from the DAX.
Image: Reuters/R. Orlowski
Advertisement
A Bavarian payment processing company overtook Deutsche Bank on Tuesday to become Germany's most valuable financial services provider.
Wirecard shares, part of the Tec-Dax index, were worth more than €21 billion ($24 billion), beating Deutsche Bank's €20 billion market valuation.
In the past year, the share price has risen by 150 percent from €68 in August 2017 to €170 this month.
It is now the fourth most valuable company in the financial sector after Allianz, Munich Re and Deutsche Börse.
In September Wirecard is expected to join the DAX Index, the top tier of Germany's publicly traded companies, likely replacing Commerzbank.
Processing payments
Wirecard makes its money by processing credit card payments for online retailers, guaranteeing payment and assuming risk for a small fee.
It also issues credit cards, facilitates smart phone payments and cooperates with Asian services such as Alipay and WeChat.
The stock price has had a chequered history after allegations of balance sheet discrepancies, but its stock price has surged after taking on major clients.
The most recent push came from a cooperation with the Heinemann brothers, the Hamburg duty free wholesale and retail company.
Normally by the time you hit 30 your wildest years are behind you. But that is not necessarily so for the DAX. The blue-chip index includes major German companies which are susceptible to economic and political changes.
Image: picture-alliance/dpa
The first day
The DAX was introduced on July 1, 1988 by the Frankfurt Stock Exchange — the predecessor of the Deutsche Börse, which is now itself listed on the DAX index. Until then, banks such as Commerzbank, as well as media outlets like the Börsen-Zeitung and the Frankfurter Allgemeine Zeitung had been the ones to track market development in their own indices.
Image: Pietro Fiore
The inventor
Frank Mella has gone down in history as the creator of the DAX. As an editor of a stock market newspaper he had previously developed an index. His publisher commissioned him to come up with another stock market index for Germany — thus the DAX was born. It technically debuted on July 1, 1988,but mathematically speaking, December 30, 1987 was its base date with a starting value of 1,000 points.
Image: picture-alliance/dpa
German heavyweights
To this day, the DAX lists the shares of the 30 largest and most lucrative German companies from the Frankfurt Stock Exchange. It is the most important German stock index and represents around 80 percent of the market capitalization of listed stock corporations in Germany.
Image: picture-alliance/dpa Themendienst
It's all about performance
Every second from 9 a.m. to 5:30 p.m., DAX figures are calculated using the Xetra electronic trading system. Thus, the DAX is a so-called performance index — in contrast to America's Dow Jones Industrial Average index in which market capitalization is not weighed.
Image: picture-alliance/dpa/A. Dedert
A family of indices
In the spring of 1994, the new DAX 100 index was introduced. This index was created to reflect the performance of the 100 most liquid stocks on the stock market. In 1996, the MDAX was added. It represented 70 medium-sized companies, but was reduced to 50 in 2003. In the same year, the HDAX replaced the DAX 100. Today in addition to these are the ÖkoDAX, TecDax, SDAX among other segments.
Image: Reuters
The first of many bad days
Those who are really in for the long term can rejoice over big profits. But there have been many ups and downs over the last 30 years. The DAX experienced its first really bad day on October 16, 1989. In the wake of the stock market crash on Wall Street, the German index lost about 13 percent of its value in a single day. After that came more losses at some of the most renowned companies.
Image: AP
A comeback in slow motion
Shortly after the turn of the millennium, enthusiasm for tech stocks fizzled. Too many investors had gotten burned. The DAX slipped below 2,200 points in March 2003 a low not seen since late 1995. Then the global economy recovered and confidence once again grew, yet it took until the summer of 2007 before the DAX again hit the record of 8,000 points from the year 2000. This climb ended in a crash.
Image: Reuters/Staff/Remote
The global economy on its knees
After the American investment bank Lehman Brothers declared bankruptcy on September 15, 2008, a financial crisis hit the global economy hard. In October 2008, the DAX was hit by one bad day after the other. By March 9, 2009, the DAX had lost 56 percent since its high on July 13, 2007. Shortly thereafter, the US Federal Reserve turned on the printing presses and things started to look better.
Image: picture-alliance/AP Photo/M. Altaffer
An all-time high
When the European Central Bank decided to follow the policy of cheap money it drove the DAX over the 10,000-point mark for the first time on June 5, 2014. When the ECB decided to turn on the printing presses for even more money on January 22, 2015, the index went over 10,400. The DAX closed at its highest ever mark on January 23, 2018 with 13,559 points, but has yet to break the 14,000 ceiling.
