(Bloomberg) -- Shares of Bandai Namco Holdings Inc. were set to gain by their daily limit, with bids outweighing offers to sell by about 5-to-1, after the game maker was chosen for inclusion in Japan’s Nikkei 225 Stock Average.
The stock will join the blue chip gauge on Aug. 1, replacing Chiyoda Corp., which is being demoted to the Tokyo Stock Exchange’s second section after reporting liabilities in excess of its assets.
“This was a surprise to everyone I spoke to after the close yesterday,” analyst Travis Lundy wrote in a note on Smartkarma. Lundy estimates 27 million shares of Bandai Namco will need to be bought as funds tracking the Nikkei 225 seek to match its weightings. That may equal about one-third of the “net available to sell,” given the possibly limited desire among individual and foreign investors to dump the stock now.
Quantitative analysts at brokers including Nomura Securities Co. and SMBC Nikko Securities Inc. had expected DMG Mori Co. to be chosen, as it is in the capital goods sector like Chiyoda. The Nikkei often picks a stock from the same industry in cases of replacement. DMG Mori’s stock dropped 9.7%.
Bandai Namco makes games for Nintendo Co (T:7974).’s Switch console, among other platforms. Demand may rise following Nintendo’s announcement Wednesday of a cheaper version of the Switch. Bandai Namco is also active in mobile games, which may be poised for improved growth in the second half of this year, Bloomberg Intelligence says.