Source: Wall Street See
If Nvidia replaces Apple as the second position held by SPDR(XLK), it means that Nvidia may receive billions of dollars in funds for buying in the short term.
The $70 billion giant ETF will rebalance this week,$NVIDIA (NVDA.US)$Will it replace$Apple (AAPL.US)$as its second-largest holding?
According to media reports last Friday, the largest ETF tracking technology stocks$The Technology Select Sector SPDR® Fund (XLK.US)$will rebalance its equity weighting this week. Currently, Apple and Microsoft account for about 22% of the fund's weight, and Nvidia's weight in the fund is less than 6%.
As of last Friday's closing, the difference in market value between Microsoft, Apple, and NVIDIA was within $100 billion. According to Google Finance data, Apple's market value was $3.26 trillion and NVIDIA's market value was $3.24 trillion. The position of XLK is determined based on the market value adjusted by the floating stock, so traders may need to wait for the official notification of S&P and Dow Jones to determine the final order.
UBS predicted in a previous report:
If Nvidia rises to second place and Apple falls to third place, Nvidia's weight in the fund will soar to 21%, while Apple's weight will drop to only 4.5%.
The 15% weight fluctuation of Nvidia means that the fund needs to buy a large amount of Nvidia stocks, which may amount to $10 billion, and all of them need to be purchased on June 21 or a rebalancing day very close to that date. This large-scale transaction may push up Nvidia's stock price in the short term.
By comparison, Nvidia's total transaction volume was about $50 billion last Friday.
Analysis shows that this kind of major transformation in index funds is not common, but it is not without precedent. Matthew Bartolini, head of SPDR Americas research, pointed out that there have been rebalancing around industry classification changes, such as Amazon being moved to the non-essential consumer goods category. If we are forced to make a significant transaction, I think we have the ability to deal with it.
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Editor/tolk