* Deutsche Post stock up 30 pct in 2013
* Expected to replace either RWE or ArcelorMittal
* Passive flow from ETFs on Deutsche Post seen at 33 mln
* Short selling rises on RWE, recedes on ArcelorMittal
By Blaise Robinson
PARIS, Aug 21 Deutsche Post is
expected to join the blue-chip Euro STOXX 50 for the
first time at the index's end-August review, fuelling buying
interest from investors that track the derivatives benchmark.
The world's No.1 postal and logistics group by revenue,
whose stock is up 30 percent this year, is seen replacing either
German utility RWE or ArcelorMittal, the
world's biggest steelmaker, index analysts said.
This has prompted some traders to buy Deutsche Post shares
before the expected change, which would lead exchange-traded
fund (ETF) managers, derivatives providers and other passive
investors who mirror the index to hold the stock.
The Euro STOXX 50 has more derivative contracts tied to it
than any other European index, with open interest on options and
futures contracts representing about 855 billion euros ($1.15
trillion), data from exchange operator Eurex showed.
The potential "passive" flows stemming from inclusion in the
index would represent about 33 million shares, or the equivalent
of nine days' trading for Deutsche Post's stock, according to
Societe Generale analysts.
Traders' positioning on RWE and ArcelorMittal has been
mixed, however, after shares in the steelmaker - seen as certain
to be dropped from the index a few weeks ago - surged 25 percent
between early July and mid-August.
Short-selling data from Markit indicates slightly more
interest in shorting shares in RWE than in ArcelorMittal, a sign
that RWE is seen as losing its index slot. RWE has 2.7 percent
of its shares out on loan, up from a week ago, versus 2.3
percent for ArcelorMittal, slightly down from a week ago.
"The inclusion of Deutsche Post looks pretty much like a
done deal, and the main question for index trackers now is:
which stock will it replace?," Exane BNP Paribas index analyst
Christophe Wakim said.
"ArcelorMittal looked like the obvious delete, but it has
recovered recently, while RWE is going nowhere. We're expecting
a surge in trading volumes on these stocks ahead of the review,
because people will try to anticipate the reshuffle."
Shares in RWE, hit by plunging wholesale power prices, are
down 33 percent in 2013. ArcelorMittal's stock, down 24 percent
on the year, has lost 6 percent this week, halting a six-week
rally, which makes the index's rejig difficult to forecast.
Deutsche Post has a market value of 26 billion euros ($34.7
billion), versus 16.3 billion euros for ArcelorMittal and 12
billion euros for RWE. Market value is one of the criteria for
index inclusion, along with free float and liquidity.
When a stock joins an index, volumes jump due to a spike in
demand from ETFs and derivatives providers. Arbitrage traders
try to anticipate rejigs by buying potential entrants and
shorting potential deletes.
Results of the index's annual review will be announced late
on Aug. 30 with changes effective from Sept. 23, a STOXX
spokeswoman said. STOXX conducts one major review a year but a
sharp fall in a company's share price or market capitalisation
could see it dropped from the index at quarterly reviews
primarily devoted to weighting adjustments.