Blue Chip Bounce: Bandai Namco Limit Up on Nikkei 225 ‘Surprise’
Shares of Bandai Namco Holdings were set to gain by their daily limit, with bids outweighing offers to sell by about 5-to-1.
(Bloomberg) -- Shares of Bandai Namco Holdings Inc. surged by their daily limit to a record after the game maker was chosen for inclusion in Japan’s Nikkei 225 Stock Average.
The stock rose 1,000 yen, or 19%, to 6,190 yen at the close after it was untraded in the regular session with bids outweighing sell orders by 14-to-1 at one point. That’s the stock’s largest gain, and its highest close, since the 2005 merger that created the company.
Bandai Namco will join the blue chip gauge on Aug. 1, replacing Chiyoda Corp., which is being demoted to the Tokyo Stock Exchange’s second section after reporting liabilities in excess of its assets.
“This was a surprise to everyone I spoke to after the close yesterday,” analyst Travis Lundy wrote in a note on Smartkarma. Lundy estimates 27 million shares of Bandai Namco will need to be bought as funds tracking the Nikkei 225 seek to match its weightings. That may equal about one-third of the “net available to sell,” given the possibly limited desire among individual and foreign investors to dump the stock now.
Quantitative analysts at brokers including Nomura Securities Co. and SMBC Nikko Securities Inc. had expected DMG Mori Co. to be chosen, as the company is in the same capital goods sector as Chiyoda. The Nikkei often picks a stock from the same industry in cases of replacement. DMG Mori’s stock dropped 9.8% to 1,599 yen.
Bandai Namco makes games for Nintendo Co.’s Switch console, among other platforms. Demand may rise following Nintendo’s announcement Wednesday of a cheaper version of the Switch. Bandai Namco is also active in mobile games, which may be poised for improved growth in the second half of this year, Bloomberg Intelligence says.
Chiyoda fell 2.6% to 305 yen at the close. Given its large price gap with Bandai Namco, the substitution is seen impacting other names on the price-weighted Nikkei 225. Fast Retailing Co. is the most expensive stock on the gauge at 67,650 yen.
“We expect this addition of a highly priced stock to reduce the weighting of those stocks that have a high weighting in the Nikkei Average,” Junichi Hashimoto, an analyst at Daiwa Securities Co., wrote in a report.
To contact the reporter on this story: Kurt Schussler in Tokyo at kschussler1@bloomberg.net
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Kurt Schussler, Teo Chian Wei
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