The concepts of technology and finance are inextricably linked. After all, without functioning capital markets, stock exchanges and open-minded shareholders as investors, the previous industrial revolutions - such as the development of the railroad system or electricity - would not have been possible. On the other hand, industrial progress, technological innovations and new processes are important drivers for the capital markets and stock exchanges.

Thomas Rappold is a financial and stock market expert, author (Silicon Valley Investing) and founder of numerous internet start-ups as well as investment advisor to the tech indices listed.

© Thomas Rappold

We are currently in the midst of the fourth industrial revolution and are generally talking about the digitalization of all areas of life and work - the right time to regularly examine the exciting facets of I4.0 from an investor's perspective. After all, we have been on a ten-year upswing since 2009. The German stock market index MDAX - home to numerous German technology world market leaders such as Dürr and Kion - has risen from 4,500 to 24,600 index points since March 2009. - An increase of around 540% and also a development that is based on solid foundations: in the same period, dividend payments to shareholders in the MDAX rose from EUR 2.1 billion in 2009 to a new record of EUR 9.5 billion in 2018.

Foreign investors in particular appreciate the quality of German shares. According to an analysis by the auditing and consulting firm Ernst & Young (EY), almost EUR 20 billion of the EUR 36 billion in dividend payments from the DAX in 2017 - more than half! - abroad. Germany is therefore not only the world champion in exporting products with the 'Made in Germany' seal of quality, but is also increasing the wealth of foreign investors and pension funds. In view of this development and the record low interest rates on savings, a rethink is required in Germany: It is not without reason that the most successful investor Warren Buffett, for example, recommends investing more in investments that you know the most about or in which you have the relevant insights. With this 'Circle of Competence' strategy, Buffett became a rich man with an estimated fortune of currently over 80 billion US dollars. And he is also increasingly investing in quality German companies. In addition, shares and thus voting rights in the hands of his own employees secure jobs in Germany in the long term. This puts a stop to anonymous international financial 'locusts' that are only focused on returns.

Tech indices in analogy to technology construction kits

Against this backdrop, one of the ideas that emerged was to translate long-term and sustainable technological developments into indices that are profitable for investors, each consisting of up to 20 shares - similar to the technology kits and libraries commonly used in industry today to create new products and services.

The 'Industry 4.0 Technology Performance Index' forms the umbrella. It includes the world's leading companies in this segment. The umbrella is supported by the important pillars or thematic indices 'Cyber Security Performance Index', 'Artificial Intelligence Performance Index', 'Blockchain Technology Index' and the '5G Technology Index'.

The indices cover the entire value chain of the respective topic. Consequently, companies from the automation, robotics, sensor technology, software and data service providers, mechanical and plant engineering and engineering service providers segments are eligible for the Industry 4.0 Index. Key factors for selection are: high brand awareness, comprehensive patent protection and the uniqueness of the business model. In addition, the products manufactured and solutions offered by the companies must serve the largest possible market that promises long-term and sustainable growth. Last but not least, the companies should have excellent entrepreneurial management - ideally represented by the founders - and a business with a strong international focus.

Membership of consortia such as Hyperledger, R3 Corda and Ethereum play an important role in the blockchain indices, while standardization bodies such as 3GPP and 5GPPP play an important role in the 5G indices.

Hannover Messe 2019 under the sign of 5G and AI

Anyone who visited the recent Hannover Messe, which this year was held under the significant motto "Integrated Industry - Industrial Intelligence", was able to experience the digital symbiosis of Industry 4.0 and AI live at numerous stands. As well as the new 5G mobile communications standard, which - according to ZVEI President Michael Ziesemer - "can be the starting point for a completely new factory world". Bosch Rexroth board member Dr. Marc Wucherer even formulated the following demand: "We need a functioning 5G network as a digital nervous system. Without it, we cannot realize the vision of our 'factory of the future'."