MEL - Meridian Energy

[Maxtrade]

Start the ball rolling with your buy in price thoughts?

Due to the share volume and limited period of time allocated for the rebalance, we suspect the SP will be driven down steadily over the next 10 days with block sells. Likely to see SP find solid support level at 3.75-3.85. With a sharp rebound up to $4. So if able to time a buy around $3.75-$3.80 will likely be where most large traders are looking to jump in.

[peat]

RSI is diverging and have we already had a higher low????

Lows

26/3 = 5.10
8/3 = 5.06

It hit 6 in between...

But volatility is high. I personally think from the charts that any spike down will be short lived

[Maxtrade]

April 2nd, Shares Global clean energy ETF rebalance sell off commences, needs to be completed by April 16th

[ados_nz]

Do you expect this to be an on market sell down or would the ETF look to transfer their positions to other institutional investors?

I've never been party to an ETF sell down period so very interested to see how this affects SP.

[lawson]

I don't know but here's an article speculating on it:

With Gigantic Inflows, How Will This ETF Heavyweight Rebalance Itself?

BEN HERNANDEZ MARCH 26, 2021

---

The iShares Global Clean Energy ETF (ICLN) has grown so large that it’s now looking at a major rebalancing.
According to a recent Financial Times report, ICLN and its European equivalent INRG “are braced for a major index rebalancing after amassing too much money in too few companies.” The problem of course isn’t the influx of capital, but too few holdings.
“Massive investor inflows into two BlackRock exchange traded funds pinned on just 30 clean energy stocks may force the asset manager to sell billions of dollars worth of shares to prevent it building up overly large holdings in the companies,” the FT report noted. “The potential sales of two New Zealand energy companies would represent the amount that is typically traded in 40-50 days in order to comply with a dramatic index rebalancing.
“The exchange traded funds might also need to offload more than 10 per cent of the free-float market capitalisation of some other companies if the shake-up proceeds as proposed next month, according to Société Générale, which revealed its views in a narrowly circulated report produced for clients,” the report added further.
ICLN seeks to track the S&P Global Clean Energy Index, which is designed to track the performance of approximately 30 clean energy-related companies. The fund is up over 130% the past year, so it’s not hard to understand why it’s so popular.
“I bet every hedge fund is looking at that list to work out where they can buy these stocks so they can sell them short,” said Peter Sleep, senior portfolio manager at 7 Investment Management.
“This gives an opportunity for front-running. The stocks that are going to be bought here are probably already going up in anticipation of this rebalancing,” added Kenneth Lamont, senior fund analyst for passive strategies at Morningstar.

https://www.etftrends.com/equity-etf-channel/with-inflows-how-will-etf-rebalance/

[bull....]

I don't know but here's an article speculating on it:

With Gigantic Inflows, How Will This ETF Heavyweight Rebalance Itself?

BEN HERNANDEZ MARCH 26, 2021

---

The iShares Global Clean Energy ETF (ICLN) has grown so large that it’s now looking at a major rebalancing.
According to a recent Financial Times report, ICLN and its European equivalent INRG “are braced for a major index rebalancing after amassing too much money in too few companies.” The problem of course isn’t the influx of capital, but too few holdings.
“Massive investor inflows into two BlackRock exchange traded funds pinned on just 30 clean energy stocks may force the asset manager to sell billions of dollars worth of shares to prevent it building up overly large holdings in the companies,” the FT report noted. “The potential sales of two New Zealand energy companies would represent the amount that is typically traded in 40-50 days in order to comply with a dramatic index rebalancing.
“The exchange traded funds might also need to offload more than 10 per cent of the free-float market capitalisation of some other companies if the shake-up proceeds as proposed next month, according to Société Générale, which revealed its views in a narrowly circulated report produced for clients,” the report added further.
ICLN seeks to track the S&P Global Clean Energy Index, which is designed to track the performance of approximately 30 clean energy-related companies. The fund is up over 130% the past year, so it’s not hard to understand why it’s so popular.
“I bet every hedge fund is looking at that list to work out where they can buy these stocks so they can sell them short,” said Peter Sleep, senior portfolio manager at 7 Investment Management.
“This gives an opportunity for front-running. The stocks that are going to be bought here are probably already going up in anticipation of this rebalancing,” added Kenneth Lamont, senior fund analyst for passive strategies at Morningstar.

https://www.etftrends.com/equity-etf-channel/with-inflows-how-will-etf-rebalance/

i be surprised if the share fell hard

[Tomtom]

I'm certainly interested at anywhere near those levels.

This year is unusual because inflation has been hiked by unprecedented monetary and fiscal measures, as soon as those measures are backed out and credit growth rates adjust I'm sure inflation will regress back towards to trend.

[Ferg]

Interesting to see the disclaimer / out in the middle of this sentence:

“The exchange traded funds might also need to offload more than 10 per cent of the free-float market capitalisation of some other companies if the shake-up proceeds as proposed next month, according to Société Générale

[Maxtrade]

I'm certainly interested at anywhere near those levels.

This year is unusual because inflation has been hiked by unprecedented monetary and fiscal measures, as soon as those measures are backed out and credit growth rates adjust I'm sure inflation will regress back towards to trend.

Today was the first round of iShares ETF rebalancing sell off.

Agree with previous comment 'most transactions we don't even see on market', but the result is the same whenever there is a large sell off in a company such as this, the SP does decline. Hence todays major drop in share price. This week there will be continued bulk off of Meridian shares. In turn likely we will continue to see SP decline further throughout the week. Will likely see SP into the 4.7 range by end of the week.

[bull....]

Today was the first round of iShares ETF rebalancing sell off.

Agree with previous comment 'most transactions we don't even see on market', but the result is the same whenever there is a large sell off in a company such as this, the SP does decline. Hence todays major drop in share price. This week there will be continued bulk off of Meridian shares. In turn likely we will continue to see SP decline further throughout the week. Will likely see SP into the 4.7 range by end of the week.

according to the afr article

Kiwi energy players brace for BlackRock ETFs’ mega-selldown


Contact’s weighting in the index will drop from 4 per cent to something like 0.7 per cent, and Meridian’s from just under 4.5 per cent to just over 0.7 per cent. The index changes take effect on April 19 – so that’s in effect the day on which BlackRock has to dump a combined 170 million shares
It’s not as if this has gone unnoticed. It would seem about 25 million Meridian shares and 14 million Contact shares have been shorted so far

https://www.afr.com/markets/equity-m...0210402-p57g8n