Eternal shares sink 3% as FTSE, MSCI trim weightage, may see $840 million of passive outflows

Eternal's stock took a hit today, dropping 3% as major indices FTSE and MSCI reduced the company's weightage. This adjustment comes in response to the recent cut in Eternal's foreign ownership limit (FOL), which was significantly lowered from 100% to 49.5%. The move has prompted concerns among investors, leading to a notable sell-off. The reduced FOL has positioned Eternal for potential passive outflows, estimated at a staggering $840 million. These outflows are anticipated as index funds, which track FTSE and MSCI, adjust their portfolios to reflect the new weightage. Analysts suggest this could lead to increased volatility in the short term, as market participants recalibrate their strategies. Despite the immediate impact, some experts see a silver lining. The adjustment may encourage more domestic investment, potentially stabilizing the stock in the long run. However, with global markets closely watching these developments, Eternal's next steps will be crucial in regaining investor confidence and mitigating further financial repercussions.

— Authored by Next24 Live