BHP’s new, higher market weightings kick in from the start of trading today (Monday) after a day of heavy trading on Friday.
At the same time the weightings for other stocks were adjusted downwards over the weekend – stocks such as CSL, Rio Tinto, the banks (especially the Commonwealth) and retailers like Wesfarmers, Coles and Woolies – to accommodate the large rise in BHP’s share of the ASX 200.
BHP shares ended down 2.48% in London at 2,382.50 pm (around $A45.70) on Friday, down from the $A46.92 on the ASX.
More trading will be booked today as fund managers push through rebalancing dealings for their portfolios to take account of the company’s new weighting in the ASX 200 and ASX 300 of just over 10% instead of around 6% when dual listed.
More than $15.3 billion worth of BHP shares – or over 327.41 million shares – were traded on Friday as the company’s shares rose strong to end at $46.92, up 2.7% on the day, 4.6% for the week and more than 13% year to date in 2022.
Much of these trades were shares moving from London to the ASX, so in strict terms they were not normal dealings.
While much of that is down to the unification of the company’s stockmarket listing in Sydney (ending the dual listing in London), some of that rise has been due to the sharp rise in iron ore prices since the end of December. – they have risen around 15% from the December 31 level of $US120 a tonne for 62% Fe fines delivered to northern China.
Friday’s trading in BHP helped drag the ASX 200 to a solid day’s gain of 2.2% or a rise of almost 150 points to close at 6,988.
In a statement issued earlier this month the ASX said Friday, January 28 would see the “necessary trading …. required to reflect the index changes involved in the reunification of the BHP listing on the ASX
BHP moved a total of 2.112 billion shares listed in London to the ASX late last week which will take BHP’s ASX-listed issued capital to around 5.1 billion. At Friday’s closing price of $46.92, BHP had a total market value of more than $238 billion, making it easily the largest local listed company.
According to Morgan Stanley, BHP will account for 10.9% of the ASX 200 index when the unification is complete, and could create demand for an extra $4 billion worth of shares from index tracking fund managers (such as Vanguard and Blackrock).
Today’s trading in BHP shares will come as the market reacts to Friday’s finish at the end of a very volatile session or two in the wake of the clear path established by the Fed for a rate rise in March – the first since 2018, with more to come this year.
The RBA holds its first monetary policy board meeting of the year tomorrow and while a rate rise won’t happen, analysts and economists are expecting a decision to end the central bank’s bond buying (currently $4 billion a week) and perhaps alter its guidance of a possible target year for a rate rise (2024). But it will all depend on wage rises and so far there are few signs of any surge.
There will be a few more early December 31 results – furniture retailer, Nick Scali on Thursday and News Corp and REA Group on Friday morning. Credit Corp and Amcor are also due to report this week.
