Key points

• Today is the first day the 'unified' BHP is trading on the ASX
• The Big Australian now only calls Australia home after ditching London listing
• What does a unified BHP mean for the ASX?

It's a big day on the ASX for the 'Big Australian'… BHP Group Ltd (ASX: BHP) has today claimed its place as the largest ASX company on the share market. Yes, BHP was always a heavy hitter in terms of ASX market capitalisation.

But because of this company's dual-listing structure, its size was split between the ASX listing and its old listing on the London Stock Exchange.

The 'Big Australian' now only calls the ASX home

No more. Last year, BHP announced that it would be ending the 20-year status quo that was initially triggered by the old BHP buying the London-listed Billiton back in 2001. Today is the culmination of this 'unification' process.

Ditching its London listing means that the company now only lists primarily on the ASX. There will still be secondary BHP listings in London, New York and Johannesburg. But these will only represent ownership of the ASX-listed shares.

This comes after BHP announced earlier this month that the company has received the approval of all groups of shareholders to unify BHP's dual-listed share structure. The British government also gave the proposal the green light earlier this month, which cleared the way for unification to take place today.

So today is the first day that all BHP shares trade on the ASX.

This morning, the company released an ASX announcement confirming this process. BHP  told investors that anyone who held the London-listed BHP plc (LON: BHP) shares will have them replaced with new BHP shares on the ASX. These will trade on a deferred settlement basis until 2 February. Until then, the replacement shares will trade under the ticker code 'BHPN'. But after 2 February, all BHP shares on the ASX will revert to the standard 'BHP' ticker.

So how has the BHP share price reacted to unification today? By falling 2.51% at the time of writing to $45.74 a share, that's how. But even so, expect to see a lot of BHP shares trading on the markets today.

What does a unified BHP mean for the ASX 200?

So how will a unified BHP affect the S&P/ASX 200 Index (ASX: XJO)? Well, it is a fairly dramatic change.

For starters, Commonwealth Bank of Australia (ASX: CBA) has had to relinquish its crown as the ASX's largest share, perhaps permanently. Before today, CBA was the largest ASX share on the markets by quite a large margin, commanding an 8.2% or so weighting in the ASX 200 as opposed to BHP's 6.9%.

But now that BHP's London shares have come back to the ASX to roost, we can flip this equation. For example, the BetaShares Australia 200 ETF (ASX: A200) has already updated its holdings and now lists BHP as its largest share with a weighting of 11.6%. CBA is a distant second with its 8% weighting.

That makes sense. BHP's ASX-listed market capitalisation now stands at $237.21 billion, whereas CBA remains at $162.35 billion.

So from today, any ASX exchange-traded fund (ETF) covering the ASX 200 Index will now have a lot more exposure to BHP shares than it did last week. For an index known for its bank-and-miner dominance, we just got a whole lot more 'miner'.

The post Here's why BHP shares are in the spotlight today appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) has unfortunately slipped into negative territory so far this Thursday, after an initially strong market open. The ASX 200 is currently down by 1.53% and is sitting at 6,855 points at the time of writing. That performance is getting shown up by the BHP Group Ltd (ASX: BHP) share price in a big way.

Comprehensively defying the broader market, BHP shares are currently up a healthy 1.78% at $45.83 apiece after rising as high as $46.48 earlier in the trading day.

So how is BHP managing such a robust performance this Thursday?

Well, it's not entirely clear. But it could have something to do with the ASX notice the company put out this morning before market open.

BHP shares up as unification now a virtual certainty

This notice confirmed that BHP shareholders have voted in favour of the company's proposed 'unification' program on 20 January. This will result in BHP withdrawing its BHP Group plc (LON: BHP) dual-listing on the London Stock Exchange (LSE).

That will leave its ASX listing as its primary global share market presence, as well as adding an extra few hundred billion or so to its ASX market capitalisation.

But the ASX release also revealed the UK Court has just issued a court order that sanctions the unification process. This effectively removes the last barrier to unification. The company now expects the process to be finalised at 9pm Greenwich Mean Time (GMT) on 28 January (8am on January 29 AEDT). That's when "the UK Court Order is expected to be delivered to the UK Registrar of Companies", according to BHP.

After that, BHP is expecting unification to be wholly wrapped up on 31 January. This is when holders of the BHP plc LSE-listed shares and BHP plc American Depository Receipts (ADRs) will have their shares and ADRs swapped for ASX-listed shares and ADRs at a one-for-one basis.

It's very possible this news could be behind the strong BHP share price performance thus far today. This has been a long and complicated process for the company to go through. So no doubt many investors would be pleased it has gone off without a hitch.

In other news, my Fool colleague Tony recently interviewed a top ASX fund manager that named BHP shares as one of the investments to look at in the current investing environment.

At the current BHP share price, this ASX 200 mining giant has a trailing dividend yield of 8.8%.

The post Why is the BHP (ASX:BHP) share price leaping ahead today? appeared first on The Motley Fool Australia.

Key points

• BHP is working to unite its global listings by fusing its Australian and London entities
• The BHP London share price has significantly outperformed its Australian counterpart recently, but BHP's ASX stock has the long-term lead.
• The differing performances could be explained by currency fluctuations and franking credits

Those interested in the BHP Group Ltd (ASX: BHP) share price will likely be aware of the company's plan to fuse with its London-listed counterpart BHP Group PLC (LON: BHP).

Currently, BHP is run as 2 separate companies with different legal structures and share registries.

As part of its unification, shareholders of BHP Plc will have their holdings swapped for BHP Ltd shares.

However, some might be surprised to learn the BHP London share price has outperformed that of its Australian counterpart recently.

Let's take a closer look at which side of the company has been delivering greater returns for shareholders.

Why has the BHP London share price outperformed its ASX counterpart?

The BHP share price had a shocking year on the ASX in 2021. It fell 2% over the 12 months ended 31 December.

Meanwhile, the BHP London share price gained 14% last year.

Though, ASX investors will be happy to know BHP's Australian listing has outperformed over the last 5 years.

Its shares' value increased 77% over that period, while BHP Plc's shares gained 65%.

For context, the S&P/ASX 200 Index (ASX: XJO) gained 13% in 2021 and 30% over the last 5 years.

According to WaveStone Capital senior investment analyst Duncan Simmonds, the differences in the stocks' performance is likely due to currency fluctuations and franking credits.

Simmonds told Livewire the value of the United States dollar over both the British pound and the Australian dollar impacts expectations of BHP's future cash flows, as the company reports in US dollars.

Additionally, while the two entities' shareholders receive identical dividends, franking credits are only available for Australian tax residents. Simmonds stated:

Assuming 50% of the Ltd shareholders value the franking credits and using consensus dividend estimates, we estimate the premium for Ltd over Plc should be around 15-16%.

According to BHP, the unification of its London and Australian entities is expected to go ahead later this month. No doubt, many will be watching the BHP share price in the meantime and – if all goes to plan – in its wake.

The post Does the BHP London share price perform the same as the company's ASX:BHP listing? appeared first on The Motley Fool Australia.

Ever since its merger with Billiton plc two decades ago, investors have had the option of buying the original ASX-listed BHP shares here in Australia. Or else BHP Group plc (LON: BHP) shares that are listed directly on the London Stock Exchange (LSX) in the United Kingdom. Other investors from South Africa and the United States also have the option of secondary shares. For example, the New York Stock Exchange's BHP ADR (American Depository Receipt) listings.

The Big Australian comes home

But back in August, the 'Big Australian' announced that it would be going back to its roots. It confirmed that it will scrap its London dual listing. Here's what BHP's management had to say on why the company is pursuing 'unification':

We have regularly sought to streamline and improve our corporate and governance processes. Unification would further simplify the BHP corporate structure and shareholder registers, reduce duplication and streamline our governance and internal processes. 

Unification will enable one market capitalisation and one global pool of liquidity, with the same share trading via the Group's listings on the Australian, London and Johannesburg stock exchanges and its NYSE listed ADR program.

So what does this mean for investors?

What happens to BHP shares after unification?

Well, for any British investors, the consequences are more apparent. With the delisting, BHP will be removed from London's share market, and by extension, form the UK's flagship FTSE 100 Index. But, as BHP clarified above, British investors will still be able to own BHP shares on the LSX via a secondary listing. That's similar to what already exists for American investors. They will also be given the option of receiving 1 ASX BHP share for every LSX BHP share owned.

For ASX investors, it means a whole lot of not much. There will simply be more shares available on the ASX to compensate for the lack of primary shares on the LSX. But, all other things remaining equal, BHP's market capitalisation (a.k.a. share price) will not change. Nor will its dividends, earnings or any other fundamental trait of its business. BHP has told investors that "If approved, unification is expected to occur in the first half of the 2022 calendar year".

So pencil that into your 2022 investing calendar!

The post What will happen to BHP (ASX:BHP) shares after the dual listing is axed? appeared first on The Motley Fool Australia.

Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, The Montgomery Fund portfolio manager Joseph Kim reveals a pair of ASX shares that he'd be intrigued to see in his portfolio in 5 years' time.

Timeless ASX shares

The Motley Fool: If the market closed tomorrow for 5 years, which stock would you want to hold?

Joseph Kim: I've got 2 answers here.

For the more risk-tolerant investor, I really like AVITA Medical Inc (ASX: AVH). It's done really well and it's burnt me in the past. 

There's a lot of concern around cash burn and the total addressable market, et cetera. I won't say it's not risky because they still need to execute. 

When you look at biotechs and you look at medical device companies in general, a lot of it is about promotion and they promote the product and how awesome it is. But when you talk to the surgeons and the physicians that are going to ultimately use it and have to get reimbursed by the US medical system to use it, you potentially get different answers.

Now, the other part of that is a lot of the times when they spruik their products, they don't even have approval from the FDA, right? So this is an amazing product, whatever, but we don't have FDA approval because we haven't been able to demonstrate statistical significance that this thing actually works in terms of what we say it does. 

Most of the time they don't work. [But] this one is proven to work. You've de-risked the FDA approval part, which is usually the biggest risk with these biotech and medical device companies.

So yeah, it's going to take time. And there's always going to be people that won't use it because they're just stuck in their ways… But then, ultimately, as a doctor with the duty of care, you've got to provide the best outcome to your patients. I think from that perspective, I'm pretty optimistic now. 

The other one is Goodman Group (ASX: GMG). So founder-led business, got all the right tailwinds. 

People are going to say, it looks expensive. It's [been] expensive for a long period of time. Five years is a long time… With Goodman, you have [the] right tailwinds, they're in the right areas. You've got a management team that's aligned [to a] value-focused business. You can see the pipeline of developments that they have. And in the next 2 or 3 years, you should be growing at about 10% [per annum]. The business is getting more valuable over time.

MF: Is the adoption of online shopping a theme for Goodman?

JK: It is. Data centres too, by the way, they developed data centres.

One of the big things over the past 3 or 4 years, it's [become] more extreme, is that there's a real hollowing out of the middle of everything. What I mean by that is you look at brands, luxury brands. Right at the top they're booming. The middle is where it's really suffering relatively.

It's a bit like that in property as well. You've got the cheaper property that's in not-so-great locations. And, yeah, they've all gone up with money being cheaper and cheaper, but then the top end has gone extreme.

So the middle is hollowed out. These guys are in the right place for that too. Their locations, what they have, and so you go, well, is that a trend that's going to stop anytime soon? It's unlikely. 

That's why I'm more bullish on Goodman as opposed to just pure e-commerce. Because, yes, e-commerce is great — but it's more like they're in the right places with the right pipeline of opportunities with a focused management team.

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

JK: Oh my God, this is an easy one. 

It was during March in 2020. So we were able to go defensive before the [COVID-19] market crash because we anticipated COVID being a bigger issue than what the market was initially thinking, but it took too long for us to get back in. 

Our clients and our investors didn't get the full benefit of — obviously the downward journey was much more pleasant — but the rebound journey. People are a lot more averse to capital loss than capital gain, right? So that journey is a lot more unpleasant. There are few people who got both sides [correct].

Why it's even more frustrating is because at the bottom of the market, we were like, 'Hey, we're really outperforming'. This is when things start to look reasonable and we should lock some of that away now. What I mean by that is we should really start using some of [that] cash into really high-quality businesses that we know are going to be here in 2 or 3 years' time. 

If the market keeps falling, yeah, we'll probably fall a bit more with it, but this is where you have to look beyond the valley. 

And the reasoning was, look at what China did. China locked down for 3 months, just completely locked down. It wasn't smooth, but they were able to reduce the number of cases… Then you look at what the central banks were doing, they were printing enough money and providing enough support — physical and monetary support — to make sure that we could tide everyone over for those 3 months. 

Now, what derailed that was the US just having a rampage in COVID cases, which meant that they just didn't do that hard lockdown. 

So we did put cash to work, but it was also a period of extreme uncertainty with no vaccine timetable. But again, with the benefit of hindsight, that's probably been by far my biggest regret.

MF: Is there a particular ASX share that you missed out on that particularly hurts?

JK: We were a little bit late to Wesfarmers Ltd (ASX: WES), but we did end up buying that pretty quick. That's obviously done really well. 

Look, it's tempting to say BHP Group Ltd (ASX: BHP), but it's not because we identified BHP as one that had a margin of safety because of what China was doing in terms of stimulating the old parts of the economy. By the old parts of the economy, I mean the property, construction, infrastructure, et cetera. That's the easiest lever for them to pull. So it's tempting to say that, but I think there were better risk-return opportunities than BHP… Yes, the reward didn't look as high, but there was a much lower risk. So I'm not as anxious around that.

Again, we bought into it a bit late, but Goodman got below $10. And finally, when it got below $10, we knew why it was going there because there were a lot of property funds that were highly leveraged and they had to deleverage. So there was a golden opportunity to get it very cheaply.  I wish we had've got back in earlier.

The post 2 ASX shares to hold onto for the next 5 years appeared first on The Motley Fool Australia.

But Aussies also like to look at other indexes around the world as well. There's the S&P 500 Index (INDEXSP: .INX), and the NASDAQ-100 (INDEXNASDAQ: NDX) indexes for American shares.

And there's also the FTSE 100 Index (INDEXFTSE: UKX). The FTSE 100 measures the performance of the largest 100 companies over in the United Kingdom. It's this latter index that we'll be taking a closer look at today.

The FTSE 100 is an interesting case. Because, unlike the ASX 200, or the S&P 500 and Nasdaq, the FTSE 100 has not yet surpassed its pre-COVID highs.

How has the FTSE 100 performed in 2021 compared to the ASX 200?

So just to recap, the ASX 200 is currently up 10.53% year to date in 2021, including today's movements so far. What of the FTSE 100? Well, the FTSE is currently up 6.03% in 2021 as of today. It's also up 12.18% over the past 12 months, again not quite matching the ASX 200's 21.23% over the same period.

So why this underperformance compared to the ASX 200?

Well, to answer that question, let's check out the shares that make up the majority of the FTA 100's weightings right now. This data comes from BetaShares, the provider of the ASX's only FTSE 100 exchange-traded fund (ETF), the BetaShares FTSE 100 ETF (ASX: F100):

How have FTSE 100 shares performed lately?

Ok, so some interesting observations here. Firstly, you might see some familiar names here with BHP and Rio Tinto. These actually reflect these Australian companies' London listings (they are also both listed over in the United States). So yes, these two companies contribute to the ASX 200, as well as the FTSE 100.

You might also notice the FTSE 100's largest holding is none other than AstraZeneca, a company that most of us would probably be familiar with these days for obvious reasons. AstraZeneca shares have had a rather successful 2021 so far, gaining close to 14% year to date. However, the shares are also still down 3.34% over the past 12 months.

GlaxoSmithKline is also a pharmaceutical company (it's the face behind brands like Panadol). GSK is up slightly year to date, but down 12.3% over the past year.

Other than that, we see the consumer staples giant Unilever here (the company behind Lynx deodorant, Dove soap, Omo washing powder, and Lipton tea). Unilever shares are down more than 9% in 2021 so far, and down more than 13% over the past year.

We also see the oil giants BP and Royal Dutch Shell. Like ASX energy shares, these companies have been struggling over the past year or so. Both are up in 2021 so far but BP remains down over the past 12 months.

We also have a bank in HSBC (which stands for Hong Kong and Shanghai Banking Corporation). HSBC shares are up moderately in both 2021 and over the past year.

Rounding it out we have a couple of 'sin stocks' in Diageo and British American Tobacco. Diageo is the giant alcohol company behind famous brands like Johnny Walker, Guinness and Tanqueray. While British American Tobacco makes cigarettes and tobacco products (including the Winfield brand).

Diageo has been a top FTSE 100 performer, putting on gains of almost 18% in 2021 so far, and 21.7% over the past 12 months. British American Tobacco is in the red over both periods.

Foolish takeaway

So it's pretty easy to see where some of the FTSE 100's lacklustre performance has come from in 2021 so far. Unlike the ASX 200, the FTSE 100 is not concentrated heavily on banks and mining companies, although they are present.

Shares like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) have done most of the heavy lifting when it comes to the ASX 200's performance this year so far. In contrast, top FTSE shares like AstraZeneca and Unilever have performed far more poorly. As such, we can see what has made both indexes tick in recent times.

Still, every index tends to have its day in the sun, so who knows what the future might hold for both the FTSE 100 and the ASX 200.

The post How is the ASX 200 performing against the FTSE 100 in 2021? appeared first on The Motley Fool Australia.

S&P/ASX 200 Index (ASX: XJO) resource shares have been enjoying the tailwinds of soaring commodity prices.

While metals like gold, copper and iron ore have slipped from their multi-year (or even record) highs, they remain well above where they were trading this time last year.

For example, iron ore, Australia's top export earner, is still trading for US$207 per tonne.

And that's helped convince Morgan Stanley (NYSE: MS) to upgrade its outlook for an ASX 200 resource share that's listed on multiple international exchanges.

In this instance, the upgrade comes from Morgan Stanley's London office.

What international ASX 200 resource share did Morgan Stanley upgrade?

Morgan Stanley already has an overweight rating on ASX 200 listed BHP Group Ltd (ASX: BHP). Those shares, obviously, trade on the Australian Securities Exchange.

However, BHP shares are listed on major exchanges across the world, including the London Stock Exchange (LSE) where it's listed as BHP Group PLC (LON: BHP). And yesterday (overnight Aussie time), Morgan Stanley upgraded BHP Group PLC to overweight.

As the Australian Financial Review notes, London office analyst Alain Gabriel reckons BHP shares offer "generous capital returns".

Part of his bullishness on BHP is based on today's iron ore prices holding, in which case Gabriel forecasts "it's trading on a financial 2022 free cashflow yield of 23 per cent. Even at base case forecasts that's 14 per cent".

According to Gabriel (quoted by the AFR):

Shares have underperformed peers YTD by an average of 11 per cent and are implying a [long-term] iron ore price of $US71 a tonne versus a spot price of $US207 a tonne.

Gabriel upped his price target to 2,360 pence, up from 2,110 pence.

BHP PLC closed yesterday at 2,065 pence, implying a 14% potential upside.

A word on international listings

It's worth noting that BHP shares don't move identically in the different exchanges where the company is listed. Some of that's due to currency fluctuations, and some on the demand dynamics in any given market.

However, BHP's London and Aussie listed shares do tend to move rather closely.

Over the past 5 days, for example, BHP's London shares have lost 2.1%, while on the ASX 200 they're down 2.2%.

Going back a full year, the difference is larger, with BHP shares gaining 23% on the LSE while they've gained 33% on the ASX 200.

The post ASX 200 resource share upgraded to 'overweight' on LSE by Morgan Stanley appeared first on The Motley Fool Australia.