NVDA: What's the Influence of Rebalancing?

marketpre
2023-07-20

Some brief calculations on the NASDAQ 100 (NDX) rebalance: $NASDAQ 100(NDX)$ $NVIDIA Corp(NVDA)$

$NVIDIA Corp(NVDA)$ to be reweighted 7.3% to 4.3%, a loss of 3 percentage points. Approx. £300 BILLION tracks the NDX globally. So, an initial loss of investment in NVDA through these funds of $9 BILLION.

This is equivalent to 19 MILLION NVDA shares sold at the current stock price (less than half a day's trading volume).

Representing just 0.8% of the 2.371 BILLION NVDA shares float.

I think there may be some mild artificial price depression for a few weeks but nothing major.

Can anyone sensible (out of the 3% of sensible people that populate this forum) please comment on this?

Also, there is this misperception that all this institutional selling is going to suddenly happen on Monday 24th July. That has to be nonsense. It seems overwhelmingly likely that funds are already selling to adjust their positions now that the target weightings are published, for a range of reasons including: logistics, reducing market impact and minimising opportunities for front-running.

I think the negative impacts of the rebalance may be felt more by the tracker funds (e.g. the Investco QQQ/TQQQ/SQQQ) instead of the Magnificent Seven, as the funds will lose performance.

Semiconductor Companies & Industry DIG
The global semiconductor industry has been evolving and growing steadily. Semiconductors are the foundation of contemporary electronics. What companies in your watchlist? Do you have special comments to share?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment