RE: De-listing16 Feb 2024 11:03
I’d advise that you all swot up on arbitrage trading.
A depository interest purchased in the UK wraps exactly the same product (a TUI share) as it does and will in Germany.
Yes, large numbers of DIs will need to be sold by institutions tracking the FTSE now that TUI is leaving. But TUI is leaving the FTSE months after it joins new groupings in Germany, which in itself will attract new tracking purchases from institutional investors. So some volatility isn’t surprising as it chops and changes, but it’s wholly unpredictable and will not lead to a significant divergence in UK vs Germany; not significantly more than currency exchange.
Reason? If it DID diverge substantially, arbitrage trading would ensue, thereby closing the divergence.
Remember that the vote to delist was 98%. Do we really think that a few retail investors who can’t be bothered to find a way (or wait to be presented with a way) of moving their holding to Germany or to a custodian account will bring the share price way down? Those with stakes large enough to affect the share price will have no problem in navigating the listing change, hence their vote for it.
I’d really encourage comparing the share price here with, say, IAG’s current travails; IAG, who are having no change to its listing. And especially to the FTSE250, which is still just about within its 2-year downward trend, but which is within a gnat’s crotchet of breaking free to the upside. Doing so would likely coincide in my view with TUI finally jumping into the high 600s and upwards.
Forgive me… I’ve been mentioning on and off the value in looking at the wider FTSE250, not just TUI, as a hint of whether TUI is really so different, but I really do believe it’s worth considering to inspire patience. Make or break time now — if FTSE250 breaks upwards now we’re in luck. If it sinks back down we require more patience — but that’s all it is, patience, not a crisis. TUI’s results are only going in one direction, which is up. So is the FTSE250 by the way, unless you wish to ignore history.
Sign In
Follow the stocks
