thanks. Key call outs: Morgan Stanley’s equity strategists...

thanks. Key call outs:

Morgan Stanley’s equity strategists reckon Seven Group Holdings will have the best crack at joining the ASX 100 ranks and Neuren Pharmaceuticals the ASX 200 -- though the latter spot would be tightly contested.

The strategists are tipping April 18 (and the week before) to be a decent sized trading day for the new index entrants, as passive funds and low tracking-error active ones rebalance portfolios to account for the index changes triggered by OZ’s departure.

Picking the new index arrivals for the ASX 200 wasn’t as straightforward, with the Morgan Stanley market hats weighing Bellevue Gold, Ventia Services and (their eventual pick) Neuren Pharmaceuticals as OZ’s potential replacement in the index.They said Neuren had the biggest float-adjusted market cap of the three candidates at $1.6 billion after meeting the liquidity criteria.

“On a 6-month daily average float-adjusted market cap rank (“rank”), Bellevue Gold (BGL) is currently the highest ranked at 179, followed by Ventia Services Group (VNT) at 182, whilst NEU is 196. However, the spread based on the 6-month daily average float-adjusted market cap between BGL and NEU is circa A$140m and on current float-adjusted market cap it is circa A$250m with NEU having a considerable size advantage over the higher ranked stocks,” Conte et al said in a note, based off March 20 share prices.However, the markets hats were careful to caution variables that could affect their pick, including S&P index committee’s discretion and share price performance of Neuren, Ventia, and Bellevue between now and OZ’s scheme meeting.