Local investors are in the minority in the German stock market index. Foreign investors are increasingly buying into the DAX – and are increasingly exerting influence.
Foreign investors dominate Germany’s leading stock exchange companies – and collect around half of the dividends. In 2023, they owned the majority of shares in 21 of the 40 DAX companies, according to a new study by the auditing and consulting firm EY. On average, German investors held just over a third of the DAX shares (33.6 percent), it said. Around every second share (51), on the other hand, was owned by foreign investors – the rest of the share portfolio could not be assigned.
North American investors in particular have significantly increased their involvement in the German benchmark index – from 17.4 percent in 2010 to 23.5 percent recently. The share of European investors, however, fell slightly during the period to 22.6 percent, according to EY.
According to EY, only nine DAX companies definitely had at least half of their shares in the hands of domestic investors as of December 31, 2023, including Deutsche Telekom, BASF, Deutsche Bank and BMW. For many companies, not all shares could be clearly assigned to the domestic and foreign categories, the authors wrote. The values given are therefore minimum figures.
Only a minority of DAX dividends flow into German accounts
The strong weight of foreign shareholders also means that dividends are being paid abroad on a large scale. According to the study, of the 53.8 billion euros that the DAX companies paid out for the past financial year, at least 26 billion euros went to investors abroad and 22.2 billion went to investors in Germany.
Mercedes-Benz reportedly made the highest transfers abroad. Dividends of 3.4 billion euros went to foreign investors and 2.1 billion to German investors. The lion’s share of other major dividend payers in the DAX, such as Allianz and Siemens, also went to investors abroad.
More influence on companies
Henrik Ahlers, CEO of EY, sees the strong involvement of foreign investors in the DAX as “evidence of the continued high level of trust in the German economy”. However, the strong weight of foreign shareholders is accompanied by an increasing influence on company decisions: “And the interests of a US investor can certainly differ from those of a German investor,” says Ahlers. This means that company strategies are geared even more towards the global competitive situation – and take less account of sensitivities in Germany.
The large proportion of American investors in the DAX is nothing new. The capital market in Germany is considered to be comparatively weak.
On average, around 12.3 million people had shares, equity funds and/or exchange-traded index funds (ETFs) in their portfolios in 2023, according to calculations by the German Stock Exchange Institute. Compared to the local population aged 14 and over, only one in six was involved in the stock market.
Source: Stern
