Glencore Index Re-Weighting May Boost Share Price, BMO Says

Shares of Glencore International Plc (GLEN), the world’s largest publicly traded commodities supplier, may gain as its weighting in FTSE and MSCI Inc. (MSCI) indexes is adjusted in the coming months, BMO Capital Markets said.

A further 2.7 billion Glencore shares will become eligible for trading starting May 25 as employee lock-ups relating to last year’s initial public offering lapse, Tony Robson, a Toronto-based analyst at BMO, said in a May 18 report.

The resulting jump in the Glencore free-float to about 57 percent from 17 percent may spur buying from so-called index tracker funds, he said. The next FTSE re-weighting is likely to occur on June 18 while the MSCI is expected to re-balance on Sept. 1, BMO said.

“With more than 200 million shares likely to be bought by tracker funds, there could be a share squeeze if employee shareholders hold on to their stock,” Robson said. “In situations where there is a healthy increase in demand, a ‘bump’ in share price is possible, however, this depends entirely on the inclination of unlocked shareholders to sell.”

Glencore advanced 1.8 percent to close at 351.5 pence in London. The stock has declined 34 percent since Glencore sold $10 billion in shares at 530 pence apiece in an IPO a year ago.

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net