Ascent to the technology elite: Linde now in the Nasdaq 100

In a significant step for the industrial gas manufacturer and plant engineering company Linde, this year's March 18 not only marks another milestone in the company's history but also a decisive moment for investors and market observers. The global player now officially joins the ranks of the Nasdaq 100 Index members, a prestigious list predominantly comprising the stocks of leading technology companies. Meanwhile, the software company Splunk exits the esteemed selection index. The integration into the Nasdaq 100 is not the first accolade for Linde, as the company made it onto the honor roll of the S&P 100 Index three years ago. Linde, which became a heavyweight on the stock market following a mega-merger with the American competitor Praxair in 2019, took a strategic U-turn in February of the previous year: With a focus on more efficient accounting and due to valuation issues, including a rule of the German stock exchange indices, Linde separated from the German benchmark index Dax. The exit from the Dax was complicated by a cap rule that limited the maximum share of a company in German indices to ten percent. Linde criticized this rule for hindering the potential of its stock. As a direct response, a new regulation comes into effect concurrently with Linde's Nasdaq entry: The cap within the Dax index family will increase from 10 to 15 percent, thus harmonizing with international standards. Particularly the software giant SAP, considered a heavyweight in the Dax, will benefit from this adjustment. The effects of these index adjustments on the funds industry, especially those aiming for precise replication of indices, such as physically replicating ETFs, should not be underestimated. Rebalancing in their portfolios may lead to immediate, albeit mostly short-term, movements in the stock price and hence come into the focus of investors today.