Tesla supplier CATL’s inclusion in China’s CSI 300 Index may spur US$2 billion buying frenzy, analysts say

The share price of Contemporary Amperex Technology (CATL), China’s and the world’s largest lithium-ion battery maker, will be boosted by its inclusion next month in the CSI 300 Index, which tracks the country’s biggest onshore stocks.

The inclusion may spur local and global fund managers into buying as much as 12.9 billion yuan (US$2.02 billion) of the stock, which translates into about 1 per cent of CATL’s current market capitalisation, analysts Deng Hu and Sun Kaige wrote in a report on Monday. Passively managed funds that track the CSI 300 will probably allocate 5.16 billion yuan to CATL to mimic the composition of the benchmark, they added.

Inclusion in the CSI 300, which is China’s most comprehensive gauge and offers a broader picture of trading on the bourses in Shanghai and Shenzhen, will be yet another catalyst for the battery maker. The shares of CATL, which supplies to US electric vehicle (EV) giant Tesla, have already jumped 10-fold over the past two years amid booming EV sales at home and aboard.

CATL stock rose 0.4 per cent to a record 663.28 yuan on Tuesday in Shenzhen, valuing the company at 1.54 trillion yuan. It is now the third-biggest stock on the Shanghai and Shenzhen exchanges, after liquor distiller Kweichow Moutai and the Industrial and Commercial Bank of China (ICBC). A 7 per cent gain will allow CATL to eclipse ICBC and become the second largest stock.