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Thyssenkrupp to Drop Out Of Germany’s Blue Chip Index DAX

Thyssenkrupp AG will leave Germany’s benchmark stock index this month; the share market operator mentioned, the latest setback for the…

By Brooks Schroth , in Defense News , at September 5, 2019 8:03 AM EDT Tags: , ,

Thyssenkrupp AG will leave Germany’s benchmark stock index this month; the share market operator mentioned, the latest setback for the weak conglomerate’s turnaround efforts.

Thyssenkrupp will leave the DAX on Sept. 23 and will probably be replaced by plane engine manufacturer MTU Aero Engines AG, making it the second founding member to exit the 30-member index in the past 12 months.

Struck by four profit warnings and two botched restructuring attempts, shares in Thyssenkrupp have dropped 42% a year ago, while the DAX has kept steady. The stock will become a part of Germany’s midcap MDAX index.

The decision by stock market controller Deutsche Boerse contributes to the long list of issues at Thyssenkrupp, which in August was downgraded by rating agencies S&P and Moody’s in light of an easing global economy.

For Chief Executive Guido Kerkhoff, exclusion from the DAX means another defeat in his efforts to overtake the sprawling group by selling all or a part of its prized lifts subsidiary.

The index departure means exchange-traded funds tracking the DAX must sell the stock. It will also no longer be a funding option for actively managed mutual funds that are restricted to blue chips as outlined by the DAX.

Thyssen, which united with Krupp 20 years ago, has been a member of the DAX since its commencement in 1988. In 2018, founding member Commerzbank dropped out and was replaced by payments firm Wirecard.

However, he said that was not necessarily a bad thing as smaller indices have defeated the DAX in recent times. The MDAX has gained about a quarter since January 2016, compared with a 12% rise of the DAX. The small-cap SDAX index is up 19%.

Shares in Thyssenkrupp surged 2.8%, the second-largest gainers among blue-chip German corporations.