The BITA American Lithium and Battery Metals Giants Index (BALITG) is the definitive benchmark stock market index for the battery and lithium technology sector. It is designed to capture the returns realised by 15 of the largest American companies that have direct exposure to the extraction and commercialisation of metals used in the production of batteries. BALITG was launched on the 21st December 2018 by BITA, a reputable German-based FinTech company, which also maintains the index.
BALITG launched with a value of 1000 at inception. The index initially drifted lower, but it found support at the start of 2020. It gradually edged higher and broke above the psychological 1000 barrier in June 2020. It continued to accelerate the rally throughout the year and managed to print an all-time high of circa 2670 in January 2021. Since then, a natural retracement has occurred, and it continues to swing around the 2000 price handle at the time of writing.
BALITG is a market-capitalisation weighted index calculated using the standard Laspeyres formula. There is a unique divisor applied to ensure that the index’s value maintains continuity across different underlying company changes, such as unforeseen corporate actions. The divisor is variable and factors in dividend payments. The index has a weight cap of 20% on any one constituent, with any excess weight distributed proportionally among all other constituents until that condition is achieved. For accuracy purposes, the index is calculated up to 13 decimal places, but it is rounded off to 2 decimal places for publishing and other dissemination purposes.
BALITG has 15 constituents, and a company must meet the following conditions to warrant inclusion:
The BALITG index is rebalanced quarterly on the third Friday of March, June, September and December to ensure that its value accurately reflects the equity performance of the Battery Metals sector in America. Furthermore, the BITA index committee also reviews the index annually to ensure that it continues to accurately reflect underlying economic realities and not merely based on meaningless assumptions.
Here are the top 10 BALITG constituents as of March 2021:
|
Constituent |
Weight |
|
Livent |
19.91% |
|
Albemarle |
19.62% |
|
Lithium Americas |
19.13% |
|
Piedmont Lithium Ltd Sponsored ADR |
8.82% |
|
Standard Lithium |
4.26% |
|
CBAK Energy Technology |
4.23% |
|
Karora Resources Inc |
3.82% |
|
Talon Metals |
3.70% |
|
American Lithium Corp |
2.88% |
|
American Manganese |
2.77% |
Lithium technology is the most potent battery making technology in existence, and the growth of vehicle electrification will only fuel demand. But while Battery Metals will continue to be on a long-term growth trajectory, there are various fundamental concerns. Most companies outsource production to Asian countries, particularly Korea and China, which leaves the industry vulnerable to trade agreements and policies. The COVID-19 pandemic exposed weaknesses of the sector to overreliance on Asian countries for the bulk of their production outsourcing. Companies will obviously consider local production or alternative countries moving forward.
There is also the legislative issue, which currently favours the industry. In the US, the Biden administration has made battery production an important pillar of its carbon-neutrality strategy, a positive fundamental for the entire industry, even though there are cost concerns. Other factors that can influence the price of the index include significant price changes of major constituents, overall economic conditions, interest rates, as well as general investor sentiment.
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