The recent rebound in ASX mining shares will see the BHP Group Ltd (ASX: BHP) share price exit May with a decent gain.
Our iron ore miners copped a beating several weeks ago when China imposed a harsh COVID-19 lockdown in Shanghai. But the easing of restrictions and stubbornly high commodity prices have attracted bargain hunters.
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BHP share price records gains in May
This sets the BHP share price for a gain of around 6% in the month of May. This is in contrast to a 1.5% gain in the Rio Tinto Limited (ASX: RIO) share price and a 2.6% decline in the S&P/ASX 200 Index (ASX: XJO).
While it isn't usually easy to put your finger on just one thing affecting a company's share price, the divestment of BHP's oil and gas assets into Woodside Energy Group Ltd (ASX: WDS) is one of the key events during the month.
New Woodside shares
The Woodside share price will incorporate BHP's petroleum assets from Thursday. As part of the transaction, Woodside will issue new shares, which will make up around 48% of all Woodside's outstanding shares (post-merger).
This means BHP shareholders should get one Woodside share for every 5.534 BHP shares they own. The ex-entitlement date for BHP shareholders was 26 May.
How the transaction could affect BHP's share price
It's possible some BHP shareholders could have dumped their BHP shares ahead of that date. This may have been due to environmental concerns with some investors refusing to touch carbon-producing ASX energy shares.
The BHP share price should also be adjusted downwards to reflect the shedding of its petroleum division – all things being equal.
It seems ESG concerns and the upcoming readjustment in the BHP share price have probably been outweighed by the high energy and commodity prices.
Could the Woodside share price be next to underperform?
On the other side of the equation, some might be worried that the Woodside share price could be next to come under pressure in June. This is because carbon-conscious BHP shareholders who have hung on to their BHP shares could dump their Woodside allocation.
However, JPMorgan thinks there could be eager fund managers waiting to buy the Woodside shares on dips. The broker noted that 70% of fund managers they have surveyed are overweight on ASX energy shares.
The expanded asset base of Woodside come 2 June will increase the company's weighting in the sector. That, in turn, will force these fundies to buy Woodside shares on market to maintain their overweight position.
