On the 5th of April Nasdaq Company has informed about rebalancing of the Nasdaq-100 index which includes shares of 100 biggest companies in the USA from the nonfinancial sectors. According to the Nasdaq’s official press release all changes will take effect on May, 2 and will apply to the ratio of the quoted shares in the index only and the calculation method will remain.
The company’s ratio in the index depends on their market capitalization. According to the Nasdaq’s statement, the revision is necessary for making more accurate reflection of the existing market situation. Bloomberg notes that the index rebalancing is related to the necessity of reducing the impact of Apple on the index; its influence has risen because of the share price jump during the last 2 years.
Now Apple’s ratio in the index is 20.5 per cent, it is followed by Google – 4.2 per cent and Microsoft – 3.4 per cent. The percentage of Google and Microsoft will rise up to 5.8 and 8.3 per cent respectively. Today the capitalization of Apple is about 300 billion USD - twice more than one of Google. The index revision will make the ratio of quoted shares and companies’ market capitalization comparable. The percentage of most companies from Nasdaq-100 will not change significantly, within 0.5 per cent only. Besides Apple, 81 more companies’ percentage will be reduced, the percentage of the rest 18 companies will be raised.
Such a significant index change may influence shares prices of the biggest American corporations and may cause a strong reaction on the exchange. As The Wall Street Journal reports, the number of deals with shares included into the index must rise significantly. In 27 world’s countries more than 2,900 financial instruments are tied to the Nasdaq-100 index.
The Nasdaq-100 index is calculated since 1985. That time it included quotations of 100 biggest nonfinancial corporations in the USA. In 1998 foreign companies were also included in the index, but requirements applied to them were stricter. In 2002 all these requirements were canceled. By the time of tender opening in 1985 the index base value was 250 points, now it is 2 334 points.
