It looks like being an unusually busy few weeks for investors in German equities. First, chancellor Angela Merkel is stepping down after 16 years in office, with elections due on 26 September, and second, the DAX index is being revamped for the first time in several decades.

To say that Merkel will be a tough act to follow is an understatement. So much so that no party looks to have an overall majority, and the most likely outcome is the conservative CDU party will be replaced by a centre-left/green coalition. Markets dislike uncertainty, and should a coalition ensue investors will want a quick decision on the new leader.

Ahead of the elections, the DAX index will be expanded from 30 to 40 members with the addition of stocks such as food delivery company Hello Fresh, sportswear maker Puma, diagnostics firm Qiagen, medical technology firm Siemens Healthineers and online fashion platform Zalando.

This is the biggest ever shake-up of the German stock market benchmark, which as well as increasing its market value by around €350 billion brings in faster-growing, higher-valued companies, diluting the weighting of slow-growing heavyweights such as BASF and Deutsche Telekom.

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