Linde Stock Market Analysts Worry: Could a Collapse Happen on February 27th?
Quitting DAX: Linde's Exodus and What It Means for Its Stock
Giant gases company, Linde, is bidding adieu to the Frankfurt Stock Exchange and will only be traded on the New York Stock Exchange starting March. This departure of the DAX heavyweight, boasting a market cap of €149 billion and a 10% stake in the index, is leaving some market players fretful. The company's exit could potentially cause further price fluctuations due to the vacuum it leaves behind. ETF providers like iShares (Blackrock), Xtrackers (DWS), or Lyxor (Amundi) have invested up to €500 million each in Linde stocks, making it their largest individual position with a 10% DAX stake.
A Catch-22 for Fund Managers
Fund managers are facing a tricky situation, needing to sell their Linde stock packages as near to the cut-off date as possible to mimic the DAX performance accurately. However, selling their entire stock packages all at once could plummet the Linde price and attract the attention of the stock exchange regulator. Still, that doesn't seem to deter some portfolio managers. "We'll meticulously carry out the index adjustments - for the least possible deviation," said a leading ETF provider. "After all, investors expect us to replicate the index performance one-to-one." So, it's shaping up to be an exciting day for the Linde stock on February 27.
By the way: Top analyst predicts a crash but also spots a "stellar buying opportunity"
Linde's transition from the Frankfurt Stock Exchange to the New York Stock Exchange brings several ramifications:
For ETF ProvidersETFs tracking European indices or sector-specific funds containing Linde may face rebalancing needs. If Linde's departure from the Frankfurt Stock Exchange reduces its weight in European benchmarks, ETFs might need to adjust their holdings to maintain alignment with their target indices. On the flip side, U.S.-focused ETFs could witness increased Linde inclusion due to its deeper liquidity and visibility on the NYSE[2][3].
For Linde StockThe move could boost liquidity and draw in a broader base of U.S. institutional investors, potentially narrowing bid-ask spreads and reducing volatility. European retail investors might encounter barriers to access, depending on the capabilities of their brokers for NYSE-listed shares. Linde's latest operational performance, deemed exceptional by CEO Ian Cockerill, coupled with its involvement in sustainable projects like carbon capture and renewable diesel[4], sets it up for growth. This growth could offset transitional risks. If liquidity shifts smoothly to the NYSE, market reactions might be subdued, given Linde's cross-listings and strong analyst coverage[2][3]. No direct evidence indicates shareholder disapproval or regulatory hurdles, suggesting a well-structured transition. The NYSE listing may further attract U.S. ESG-focused investors, given Linde's green energy initiativies[4].
- Fund managers are grappling with a difficult predicament, as they strive to sell their Linde stock packages close to the cut-off date to replicate the DAX performance accurately without plummeting the Linde price and attracting regulatory scrutiny.
- Linde's transition from the Frankfurt Stock Exchange to the New York Stock Exchange might necessitate rebalancing for ETFs tracking European indices or sector-specific funds containing Linde, as the company's departure could decrease its weight in European benchmarks.
- The move to the New York Stock Exchange could potentially enhance liquidity for Linde's stock, attracting a broader base of U.S. institutional investors and reducing volatility.
- Market forecasts suggest that Linde's involvement in sustainable projects like carbon capture and renewable diesel, coupled with its exceptional operational performance, sets it up for growth, which could offset transitional risks and potentially attract U.S. ESG-focused investors to the NYSE listing.
