NZX 50 Index - Forthcoming potential Changes.

[Whome]

Kudos to both Basil and Winner for first identifying the developing opportunity back in Nov'22 then following through with detailed logical analysis, some simple maths and clear easy to read graphs that even I could understand.

[Onemootpoint]

Yes, well done.

[Shareguy]

Craig's say

NZX Index Watch – the May Index rebalance for the MSCI will be announced next Friday (12 May) and is effective 31 May. At this stage we see no change to Index constituents following the recent inclusion of EBO which brings the number of constituents to 6 (FPH, MEL, AIA, SPK, MCY, EBO). The two stocks vying for inclusion are MFT and IFT. MFT remains ineligible for inclusion due to liquidity constraints. IFT passes liquidity tests but currently fails on the market capitalisation test....assuming its market cap continues to increase IFT appears next in line for inclusion.

[Whome]

Craig's say

NZX Index Watch – the May Index rebalance for the MSCI will be announced next Friday (12 May) and is effective 31 May. At this stage we see no change to Index constituents following the recent inclusion of EBO which brings the number of constituents to 6 (FPH, MEL, AIA, SPK, MCY, EBO). The two stocks vying for inclusion are MFT and IFT. MFT remains ineligible for inclusion due to liquidity constraints. IFT passes liquidity tests but currently fails on the market capitalisation test....assuming its market cap continues to increase IFT appears next in line for inclusion.

Craigs picking IFT as next candidate for NZX50 inclusion... Surprised they don't mention TRA as a possible ... in the process to replace SML or WHS.

[Basil]

Different index mate.  MSCI is a global index for the serious heavyweight stocks.

Turners will get their turn.  Looking forward to them reporting on 23 May.

[Whome]

I see now. Thanks for that.

[Shareguy]

NZX INDEX Watch – MSCI has announced their changes this morning (effective 31 May) as follows:
MSCI Small Cap – Additions (none), Deletions (CNU, PCT, SKC)
MSCI Micro Cap – Additions (none), Deletions (THL)

[Basil]

Think the MSCI index rebalance this afternoon affected quite a lot of shares.  Huge volumes in some shares.
Be interesting to see if "normal service" resumes tomorrow.

P.S. Yes it seems a lot of shares were affected https://www.goodreturns.co.nz/article/976521795/nearly-1b-changes-hands-on-nzx-as-indices-rebalance.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+31+May+2023

[Basil]

After the huge kerfuffle and vigorous debate about HLG index inclusion last month it's probably a good thing it's all quiet on the Western front with the June quarter index rebalance.
https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20230602-1464259/1464259_20230602-quarta-nzx-map.pdf

I dare not speculate about the September quarter rebalance....at this stage.  Lot of water to pass under the market bridge before that becomes much clearer.

[Greekwatchdog]

This from For Bar this morning..

S&P DJI have announced no constituent changes will be made to the S&P/NZX benchmark indices at the June 2023 quarterly index review. There are a number of minor changes to index shares with changes effective close of market, Friday, 16 June 2023.

Looking towards the next review
Based on our calculations, liquidity could be a factor for the next S&P/NZX index quarterly review (September 2023). Our Forsyth Barr inclusion/exclusion model suggests that, for the members of the S&P/NZX 50 index, Sanford (SAN) is on liquidity watch, having failed one of the liquidity measures at the June 2023 review. Should SAN again prove to be illiquid (i.e. consecutive liquidity misses), index methodology states that it will be removed. Based on rolling forward six-month market cap levels, Gentrack (GTK) would be our pick as the likely replacement. However, again liquidity (based on our previous quarterly review calculations) could be a barrier to entry. Should that be the case, Napier Port Holdings (NPH) would currently be our next pick.

With regards to the S&P/NZX 20 Index, we remain with the view that Port of Tauranga (POT) is failing the liquidity requirements for the index inclusion and is at risk of been dropped. Genesis (GNE) is our pick as a likely replacement.   

Figure 1. June 2023 Index Review
Index   Enter   Exit   Expected Weight (rank)
S&P/NZX 10   No changes   
n/a
S&P/NZX 20   No changes   
n/a
S&P/NZX 50   No changes   
n/a
S&P/NZX 50 Portfolio   No changes   
n/a
Source: Forsyth Barr analysis, S&P DJI

Re-weighting changes
As with each quarterly review, index shares, Investible Weighting Factors (IWFs) and Adjustable Weighting Factors (AWFs) are also updated. Based on current proforma files received, the companies with the largest re-weightings are presented in Figure 2. Confirmation of indexed shares for the S&P/NZX 50 Portfolio and S&P/NZX 20 indices will be released close of market, Friday, 9 June.

Figure 2. June 2023 Review: Major re-weighting changes expected
Index   Current Weight   Expected Weight   Total Change
S&P/NZX 50 Index   


Minor changes only




S&P/NZX 50 Port Index   


To be confirmed market close, Friday, 9 June



S&P/NZX 20 Index   


To be confirmed market close, Friday, 9 June



S&P/NZX 10 Index   


Minor changes only




NZX All Real Estate Index   


Minor changes only

[winner (n)]

Freight forwarder Mondiale VGL likely to list on both NZX and ASX later this year

Could go straight into NZX50

Who will they kick off if that happened

[Basil]

I see the following as extremely vulnerable to expulsion.
PEB
SML
WHS
In addition, SAN is on liquidity watch according to Forbar

Apart from new possible listings GTK is red hot favorite for inclusion and NPH / TRA are in a race for second favorite, (price and volume discovery of those two over July and August will sort the ranking out).

Real chance of more than 1 change at the next index review to be announced after close of market trade on Friday 1 Sept.

[Cod]

NZX Index Watch – the May Index rebalance for the MSCI will be announced next Friday (12 May) and is effective 31 May. At this stage we see no change to Index constituents following the recent inclusion of EBO which brings the number of constituents to 6 (FPH, MEL, AIA, SPK, MCY, EBO). The two stocks vying for inclusion are MFT and IFT. MFT remains ineligible for inclusion due to liquidity constraints. IFT passes liquidity tests but currently fails on the market capitalization test....assuming its market cap continues to increase IFT appears next in line for inclusion. -- SG

I assume after the Cap raise the calculus of IFT inclusion has altered in their favor.

IFT $8,402,044,747 cap
MFT $7,189,876,327 cap

[Mr Cashflow]

Expect the unexpected.

[Shareguy]

Craigs am update

NZX50 INDEX WATCH – There are 18 trading days for liquidity and market cap calculations impacting the September rebalance. We see SML as almost certain to fall out and GTK as almost certain to re-enter the index. At the margin we note there is also a small chance WHS goes out of the index with TRA, followed by NPH, the next likely for inclusion. If WHS doesn't exit in September, it is more likely to exit in December given the cumulative effect of its market cap decline.