Deutsche Boerse Cuts Volkswagen in DAX Index After Stock Surge

By Nadja Brandt

Oct. 29 (Bloomberg) -- Deutsche Boerse AG reduced Volkswagen AG's weighting in the DAX Index, the benchmark for German stocks, to 10 percent after the shares surged more than fourfold in the past two days.

Europe's biggest carmaker represented 27 percent of the DAX following the rally, an increase from 6.8 percent on Oct. 24, according to data compiled by Bloomberg. Volkswagen's weighting is more than triple that of the second-biggest company in the index, E.ON AG.

The share surge meant Volkswagen was having an outsized effect on the DAX. While it was the only company out of 30 in the index that gained on Oct. 27, Volkswagen's 147 percent jump was enough to drive the measure up 0.9 percent.

``This adjustment is an extraordinary measure,'' Deutsche Boerse said in a statement yesterday. The reduction will take place on Nov. 3, and the weightings of other DAX companies will also be adjusted at that time.

Volkswagen closed at 945 euros yesterday, compared with 210.85 on Oct. 24. The surge in market value to $353 billion made the Wolfsburg, Germany-based company the second largest in the world, behind only Exxon Mobil Corp.

The advance occurred after Porsche SE announced plans to raise its stake in the carmaker to 75 percent, forcing short- sellers to cover their bets on a drop in the stock. About 12.9 percent of Volkswagen's common shares were on loan as of Oct. 23, mostly for short sales. That was the highest proportion of any company on the DAX, according to London-based Data Explorers.

Deutsche Boerse, the operator of the Frankfurt stock exchange, and BaFin, Germany's financial-markets regulator, said they are monitoring trading in the company's shares.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net.