As an aside, "sophisticated" sounds like an applause word which is not intended: I think overall the benefits outweigh the harms for Germany to have its business decisions made more by industrialists than financiers.
You might like Michael Hudson's comment: "when left-wingers–or people who call themselves left-wingers, they’re really not left-wingers at all; they’re, I don’t know what, post-left–very few people who call themselves left-wingers distinguish between industrial capitalism and finance capitalism."
They're not true monopolies but it's close enough in many respects
BMW, Daimler, VW all stuffed into one $4.3t economy. It'd be like if GM and Ford were ten times larger than they are in relation to the size of the US economy.
Scaled up to the US economy in size, those three would be up around $3 trillion in sales (five to six times the size of Walmart).
So they're co-monopolies, towering over the German economy, sharing it all with one or two other giant German companies. I suppose that's nice of them, sharing is caring.
well kinda. bmw basically is owned to 46% by two people and they control it. vw the same, most voting stock is in the hands Porsche Automobil Holding SE, basically owned by wolfang porsche, his ancestor was ferdinand porsche.
yeah on paper they are traded. but not controlled. (mercedes is different here) but a lot corporations in germany are at least still controlled by descendants
Also, the US' GNP is about 5 time that of Germany. If the NASDAQ100 is "big enough", the DAX should be big enough as well.
To stick to the GNP you mentioned: Let's say you want to own the whole world economy or you are European/German and want to own part of your own local economy. You buy something like an MSCI World (66% US) and now want to increase the miniscule percentage Germany has in them (<3%) to account for the GNP being 5 times smaller, not 22 times like the market cap suggest. Do you now want to do that by buying only 30 companies on top of the ~1600 companies inside the MSCI World? That would be extremly heavy bets on those companies. So something like a Europe STOXX 600 is much more useful for that purpose.
DAX30 is an extremly narrow set of companies, which do not have much in comman, except that they are based in Germany. Even if you wanted to bet only on their "Germanness" for whatever strange reason, why would you buy only 30 companies?
NASDAQ100 is not "big enough". You do not buy it because of its size, you buy it, because you want to bet on tech. It just happens to still be 15 times bigger than DAX30.
People buy local indices because the are easier to grasp and reported on in the news daily. Other national indices rarely are.
Diversification via stock ETFs is just 5 buckets: World, US, US Tech, emerging markets, Europe.
That is actually an argument for the bigger index, not the smaller.
In September the number of companies will be increased to 40. But even then, when you compare it to popular US indices like to SP500 or even NASDAQ100 you can already see by the number of companies, that it is still tiny. The market cap of DAX30 is roughly 1 trillion $, while the SP500 has about 35 trillion $ in it.
In my mind if you want to invest into Germany, you could buy HDAX, which also includes MDAX and TECDAX and at least consists of about 100 companies. Unfortunately it is not at all popular.
Germany just has very little publicly traded capital, partly because of the privatly owned Mittelstand, sometimes resulting big corporations like Freudenberg, Bosch and others still being owned by a family or a foundation. Both of them would easily be included in the DAX.
The other problem of course is totally missing out on the whole IT thing.