PARIS/FRANKFURT (dpa-AFX) - The upcoming vote of Linde shareholders on an end to the listing of the gas producer and plant manufacturer in Germany could make January 18 a "significant day" for the Dax. At least that's what Deutsche Bank index experts Carolin Raab and Maximilian Uleer wrote in a study available Tuesday.

With a total market capitalization of 150 billion euros, Linde is the number one heavyweight in Germany's leading index. The overall market capitalization of the Dax 40 would drop significantly as a result of a delisting, and thus have a negative impact on international perception, Raab expects. At the same time, however, the sector composition in the index would become more diverse.

Meanwhile, speculation is rife about the possible successors for Linde; and not only in the Dax, but also in the EuroStoxx 50 and Stoxx Europe 50, as well as the Stoxx Europe 600.

Linde's shareholders will vote on the delisting of the company at an extraordinary general meeting on Wednesday afternoon. If they give their okay, a hearing before the Supreme Civil and Criminal Court of the Republic of Ireland is expected to take place in the week of February 20 and Linde will then probably be delisted from the Frankfurt Stock Exchange on March 1, expect Deutsche Bank experts and index analyst Yohan Le Jallé of Societe Generale.

According to them, Linde's successor in the Dax is likely to be the armaments group and automotive supplier Rheinmetall. And this would be the case even if Commerzbank, with its freely tradable stock market value of currently around 9.8 billion euros - as is currently the case - continues to fare slightly better than Rheinmetall. The reason for this is the profitability criterion introduced by Deutsche Börse as part of its 2021 index reform: a company may only be included in the Dax if it has generated a positive operating result (Ebitda) in the past two fiscal years.

In 2020, however, that was not the case at Commerzbank, explain Deutsche Bank experts. And since Commerzbank was not due to present its financial figures for 2022 until February, this could be too late with a view to a direct inclusion in the Dax as Linde's successor.

In the EuroStoxx 50, Le Jallé expects German utility RWE to return to the eurozone's leading index, according to his latest study on Jan. 5. In the Stoxx 50, Dutch bank ING is likely to move up, according to him.

Last fall, CEO Sanjiv Lamba explained Linde's decision to leave the Dax primarily by pointing out that the dual listing in New York and Frankfurt had a negative impact on the share's valuation. An important reason for this is probably the cap on the maximum weight of each individual company in the Dax. As soon as the upper limit of 10 percent of the total stock market value is reached, it is capped in the course of the quarterly Dax reviews. This in turn has implications for passive strategies that track the Dax in real terms. Exchange-traded funds (ETFs) that track the Dax will have to reduce their holdings accordingly, explains index analyst Raab.

If Linde is no longer represented in the leading index at the beginning of March, the software provider SAP with a stock market value of currently around 130 billion euros and the industrial group Siemens with 121 billion euros will be the largest Dax groups. According to Raab, their weight in the leading index would then probably approach the 10 percent cap, but still remain below it.

In terms of sectors, the weighting of basic materials (Materials) in the index would also change most significantly, falling from 15 percent at present to around 7 percent. All other sectors would be weighted slightly higher.

Linde shares also have a high weighting in the EuroStoxx and the Stoxx 600, i.e. the indices containing the 50 largest listed companies in the euro zone and the 600 largest in Europe, writes the Deutsche Bank expert. In the leading index of the euro zone, it is almost 5 percent. In the Stoxx 600, it amounts to 1.5 percent, and if one also looks at Linde's share in the chemicals sub-sector, even 35 percent.

"All exchange-traded funds and other index trackers that have the Dax or Stoxx indices as benchmarks would be forced to sell Linde shares on the reporting date," Raab explains. "We have evaluated 300 ETFs that contain Linde shares and expect an outflow from Linde of around 3.2 billion euros." In addition, there would be all those other actively managed funds that could sell or buy Linde shares in anticipation of the delisting. The index provider MSCI, on the other hand, has already classified Linde as a U.S. stock, so its indices would not be affected./ck/mis/jha/