Investment Manager Unveils Plans: Numerous Funds to Offload Shares of Linde
Uncensored, Unapologetic Analysis: Arne Rautenberg of Union Investment Speaks Out on Linde's Decision to Leave the Frankfurt Stock Exchange
By Wolfgang Ehrensberger
BÖRSE ONLINE: The DAX giant, Linde, is contemplating a move to the New York Stock Exchange, leaving the Frankfurt Stock Exchange. What does this mean for Linde's shares?
Arne Rautenberg: Linde's decision to decamp from Frankfurt could cause a temporary hit to its share price. The largest DAX company has a significant share in equity funds, and many aren't prepared to miss out. We predict that about ten percent of shareholders will unload their shares following the delisting due to this reason.
Will Union Investment also?
Like our competitors, we plan to scale down the holdings in our Eurozone and Germany funds.
What's your take on Linde's decision?
Linde wouldn't be considering delisting if they weren't raking it in. The merger with Praxair propelled them far beyond the value of their DAX competitors, causing frequent clashes with the ten percent index weight limit for each DAX stock. You can't condemn Linde for this, but it's worth questioning why other German corporations can't keep up.
What's the impact of the ten percent limit?
Investors had to sell whenever a DAX stock exceeded the maximum ten percent share. Linde aims to shake off this chronic selling pressure. Thus, Linde's decision also serves the interests of shareholders and shareholder value. The company is already featured in the S&P 500 index, where there's no cap.
So, the withdrawal burdens the share?
Initially, yes. Linde might boost its buyback program, effectively easing the negative impact on the share price and facilitating a speedy recovery.
Potential implications
(Based on market dynamics and comparable cases such as Tui's delisting considerations)
1. Liquidity Shifts and Market AccessExclusive listing on Wall Street could centralize trading liquidity, causing EU investors to lose out.
2. Index Eligibility and Institutional DemandLinde might attrack more institutional investors from the United States, offsetting losses if trading volume migrates effectively.
3. Regulatory and Cost ConsiderationsLinde might save on compliance costs while EU investors could face increased exchange-rate risk.
4. Valuation DynamicsWall Street markets may confer higher valuations to industrial stocks, potentially benefiting Linde long-term, but also creating short-term arbitrage opportunities.
Without an official announcement from Linde (which remains listed in Frankfurt as per current data[1]), these implications remain speculative. Actual outcomes would depend on execution quality and unfolding market conditions.
- Arne Rautenberg predicts that approximately ten percent of Linde's shareholders may sell their shares due to the company's decision to delist from the Frankfurt Stock Exchange.
- Union Investment, like its competitors, plans to scale down the holdings in its Eurozone and Germany funds following Linde's delisting.
- Linde's decision to delist was driven by the frequent clashes with the ten percent index weight limit for each DAX stock, a limitation that causes pressure on its shares.
- The potential benefits of Linde's delisting include increased institutional demand from the United States, potentially higher valuations on Wall Street, and lower compliance costs.
- The exclusive listing of Linde on the New York Stock Exchange could centralize trading liquidity, causing EU investors to lose out on access to the company's shares.
