MSB Trading - 2020, page-186

Remember this wonderful commentary from our friend @ecoool2 re: ASX200 possible inclusion in March re-balance .... at these prices with more good news on the way IMO we may just scrape in ... hehe

GLTAH

https://hotcopper.com.au/threads/msb-trading-2019.4593749/page-3939?post_id=41833705#.XhURrMgzbIU

4. What does this mean for ASX200 Index Inclusion in March?

We need a higher price, and quickly! It's starting to look a bridge too far after a very promising start when we hit $A2.23 early on. Unless a big partnering deal is announced very soon, I think we can kiss the March rebalance goodbye and will have to start thinking about June 2020. We have spent most of the first 3 months of the period under the shadow of Capital's selling, and the placement at $2 which took the wind out of the share price.

MSB had an early run up to $A2.23 in mid-Sep and looked well on the way to inclusion in the ASX200 in the March 2020 rebalance.

Unfortunately, since then, the MSB price has fallen and it is now looking a lot more difficult to obtain the required market position (requiring a ranking of stock number 179 or better by March 2020).

The March rebalance will be based on the average market capitalisation over the 6 months to the end of February, announced on the second Friday in March, and implemented on the 3rd Friday of March.

Unfortunately, the amount of time that Capital has been sitting on the share price has made the task of entering the index in March much more difficult. Even though the ASX200 hit a record high on Monday this week, the average level of the ASX200 since the end of August is only up 1%. While MSB is up from $1.435 at the end of August and has an average price in the three months since then of $1.83, that's not nearly enough and we are halfway through the six months period.

As a rough figure (there's still a long way to go) and assuming prices don't change from current levels, I'm working on a required 6 months average market cap of $A1.055bn to get to stock number 179, and allowing for MSB's 15% Index Weight Factor discount, that means we need we may need an average price of $2.30 for the whole 6 months. Given the first 3 months is only $1.83, the second 3 months to the end of February will need to average $2.77.

Of course, if the small stocks from around number 160 to 200 in the ASX200 fall heavily between now and end Feb, MSB would not need to rise as much to get into the index. If MSB stays around the current price, to get into the index it would take a fall in the other stocks of around 40% given that they already have 3 months at the current record highs of the market. A bit of both might happen and MSB could enter the ASX200 with, say, a combination of a 25% rise in MSB and a 25% fall in other stocks etc (as long as there aren't many new entries into the index or some huge rises by a few stocks currently outside the ASX200).

So, I haven't totally given up on ASX200 inclusion in March, but it is looking difficult, and probably not prudent at present to expect it.