Tesla to join S&P 500, spark epic index fund trade

By Noel Randewich (Reuters) - Tesla Inc is set to join the S&P 500 in December, a major win for Chief Executive Elon Musk and his shareholders, triggering a massive $51 billion (£39 billion) trade as index funds are forced to buy the electric car maker's shares. Shares of Tesla surged 12% on Monday in extended trade after S&P Dow Jones Indices announced that the company would join the S&P 500 index prior to the opening of trading on Dec. 21.

Reuters November 17, 2020 05:05:43 IST
Tesla to join S&P 500, spark epic index fund trade

Tesla to join SP 500 spark epic index fund trade

By Noel Randewich

(Reuters) - Tesla Inc is set to join the S&P 500 in December, a major win for Chief Executive Elon Musk and his shareholders, triggering a massive $51 billion (£39 billion) trade as index funds are forced to buy the electric car maker's shares.

Shares of Tesla surged 12% on Monday in extended trade after S&P Dow Jones Indices announced that the company would join the S&P 500 index <.SPX> prior to the opening of trading on Dec. 21.

"(Tesla) will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history," S&P Dow Jones Indices said.

With a market capitalization over $380 billion, Tesla is one of the most valuable companies on Wall Street.

Tesla's inclusion in the widely followed stock market index means investment funds indexed to the S&P 500 will have to sell about $51 billion worth of shares of companies already in the S&P 500 and use that money to buy shares of Tesla, so that their portfolios correctly reflect the index, according to S&P Dow Jones Indices. Tesla will account for about 1% of the index.

In a separate press release, S&P Dow Jones Indices asked investors for feedback on whether to include Tesla all at once on Dec. 21, or in two tranches, with the first added a week earlier, due to Tesla's unusually large market capitalization.

A blockbuster quarterly report in July cleared a major hurdle for Tesla's potential inclusion.

(Reporting by Noel Randewich; Editing by Leslie Adler, Peter Cooney and Aurora Ellis)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.