Good news for Indian mutual fund investors: SpaceX could join Nasdaq 100 after 15 trading days
Elon Musk-led SpaceX is set to debut on Nasdaq on June 12 after raising about $75 billion at a valuation of nearly $1.75 trillion, making
Elon Musk-led SpaceX is set to debut on Nasdaq on June 12 after raising about $75 billion at a valuation of nearly $1.75 trillion, making it one of the largest public offerings in history. But the IPO may not be the only catalyst for the stock.According to Jefferies strategist Chris Wood, recent rule changes by Nasdaq could allow SpaceX to enter the Nasdaq-100 index after just 15 trading days, compared with the earlier requirement of a three-month waiting period.The change could create sharp demand for the stock, as passive funds that track the Nasdaq-100 would be required to buy SpaceX shares once it becomes part of the benchmark.In his latest GREED & fear note, Wood said Nasdaq has removed minimum free-float requirements for large IPOs and introduced a "fast index inclusion" framework.
Under the new rules, mega-cap listings such as SpaceX can enter the Nasdaq-100 shortly after listing.What makes the situation unusual is that only about 4.2% of SpaceX shares will be freely tradable after the IPO. Despite this, the company will reportedly be treated as having a 12.7% free float for inde weight calculation purposes.Wood noted that such fast-tracking of a mega IPO into major indices is unprecedented in the US market and could force passive funds to accumulate the stock regardless of valuation concerns.The development is also relevant for Indian investors.The Nasdaq-100 includes some of the world’s largest technology companies, such as Apple, Microsoft, Nvidia, Amazon, Alphabet and Meta.
If SpaceX joins the benchmark, Indian investors holding Nasdaq-100-linked mutual funds could gain indirect exposure to the aerospace and satellite communications giant.India currently has five mutual fund schemes tracking the Nasdaq-100 Total Return Index, including offerings from Axis Mutual Fund, ICICI Prudential Mutual Fund, Motilal Oswal Mutual Fund and Navi Mutual Fund.However, fresh investments into several overseas index funds remain restricted after fund houses approached regulatory overseas investment limits.SpaceX has already generated strong investor
interest ahead of its listing. Reports suggest demand has exceeded the number of shares on offer, while the company is expected to rank among the 10 most valuable listed firms in the US from day one.For investors, the combination of a record IPO and potential early index inclusion means the stock could see a second wave of demand soon after listing, driven not by active investors but by passive funds mandated to replicate benchmark weights.
The BriefWire