Interesting point here. 15% of BHP PLC shareholders are index funds. Whereas 20% of BHP ltd (ASX listing) is index funds. So what should happen?
1. All index funds relating to the FTSE will sell by default, this won’t be 15% as some would be MSCI world and various other index funds holding.
2. A net benefit circa 5% of buying should occur on the ASX to cater for the 20%. Yes some would be MSCI would as per above. However it’s likely ASX all ords specific funds outweighs FTSE passive funds given the 15%/20% mix.
3. In theory the rebalance should occur as the unification deal occurs so prepare for a huge amount of cross trading as FTSE index funds transfer to ASX index funds. Then net buying will occur for that slack of 5% or so I was speaking of.
Hence this may cause BHPs share price to rise with purely index buying.
Ann: Presentation on Unification of BHP's DLC structure, page-2
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