ABN AMRO shares to move from AEX to AMX

Why is Euronext changing the composition of the AEX-index of listed companies?

“An index is a reflection of the country’s largest listed companies. Every year on 19 February,Euronext ranks Dutch listed companies by size, based on market capitalization (the current share price times the number of shares outstanding) and the percentage of shares that are freely tradeable, which we call the free float factor. The top 25 listed companies in that ranking are grouped in the AEX, the next 25 in de AMX and the 25 below that bracket in de AsCX. Every year, the changes to the index take effect on 22 March. It’s good to note, though, that the majority of investors are following international indices like STOXX, of which ABN remains a constituent; hence we do not expect anything fundamentally to change.  

Why is ABN AMRO being moved to the AMX on 22 March?

“The financial sector has been hard hit by the Covid-19 pandemic. And the same goesfor our share price. On the review date (19 February) the share had lost 40 percent of its value compared to the same date last year. By contrast, technology shares have almost doubled in price over the past year. After the rebalance on 22 March, you’ll therefore be seeing a lot more technology shares in the AEX. The shift of ABN AMRO’s share to the AMX is a reflection of this trend.”

Is the move to the AMX index a degradation for ABN AMRO?

“I don’t doubt that some people, both within and outside the bank, will see it that way.Since the AEX index was created in 1983, ABN AMRO has been a constituent, except in the years when our shares were not freely tradeable because we’d been nationalised. And now, for the first  time, we’re moving to the midcap index. However, I see this mostly as a snapshot. In the past few weeks, bank shares have made quite a comeback thanks to rising interest rates, better-than-expected Q4 earnings, the prospect of economic recovery in the second half of 2021 and the promise of delayed dividend payments once the current ECB restrictions have been lifted.  Our share price has also risen in the past weeks to over 10 euros, a 12-month high. If Euronext had rebalanced today, ABN AMRO would still be in the AEX. So it’s a bit random.”

Is ABN AMRO now viewed as less robust?

“That’s an entirely different issue. Our bank is extremely well capitalized, with capitalbuffers still among the highest in Europe. But to regain our position in the AEX, our share price will have to sustain its current upward trend. If we deliver on the promises we made in our latest strategy update in the year ahead, I’m confident that our share price will continue to rise and that we’ll get promoted to the AEX index again. Another thing to consider is that the Dutch state still owns 56.3 percent of our shares, which means the free-float factor is now only 43.7 percent. Our index weighting will rise as soon as a new tranche of ABN AMRO shares is sold. That isn’t up to us, of course, but a higher share price would certainly increase the odds of this happening!”

What will the shift from AEX to AMX mean for our clients and for investors in ABN AMRO shares?

“For our clients and for investors in the bank, nothing will change. We’ll continue to serve the same clients, and investors will still be just as free to trade in our shares.”