Summary: What an important time of year. Not only is it end of half year in the US and End Of Financial Year in Australia, but the index and benchmark creator, S&P Dow Jones Indices is adding and removing stocks from key ASX indices ahead of June 20. So, we are sharing the five stocks that could likely to be supported, and the 17 stocks that could face headwinds after being removed from key indices.
As the news broke late Friday afternoon, that the S&P Dow Jones Indices quarterly rebalance was announced, we were quick to Tweet it. No surprises for guessing, the benchmark ASX200 index will be welcoming 4 mostly commodity companies who have been outperforming the market, while it is booting out 4 tech companies and one investment manager who’s shares have taken a slide as we nestle into higher for longer interest rates.
It’s important to note, the S&P Dow Jones Indices reveals which stocks it will add/remove from various key indices ahead of time, so investors, ETF providers and fund managers have a head start, before the changes take effect, before Monday 20 June. This means, if a stock is added to the index, ETF providers who copycat indices will typically be forced to compulsorily buy stocks being added and sell stocks being removed from key indices.
Simultaneity, it’s already a very busy time of year; Half Year rebalancing in the US, and End of Financial Year rebalancing in Australia, takes place prior to June 30. This is typically where we see investment managers bring their asset allocations back into alignment. This might mean fund managers trim profits from stocks and sectors that have done well. And they add to positions in those stocks and sectors that have underperformed year-on-year, to ensure their funds meet their set mandates.
However now, as 5 ASX stocks will be added and 17 will ousted from key indices before June 20 2022, it’s really important to note which stocks they are, as they may face bigger swings in there prices (due to S&P Rebalancing and EOFY).In the ASX50
- Mineral Resources (MIN) will be ADDED.
In the ASX50
- Block (SQ2) will be REMOVED.
In the ASX100
- Magellan Financial Group (MFG) will be REMOVED.
In the ASX200
The following stocks will be ADDED
In the ASX200
The following stocks will be REMOVED:
In the ASX Technology Index
The following will be REMOVED:
-
Adore Beauty Group (ABY)
-
Advanced Human Imaging (AHI)
-
Catapult Group (CAT)
-
International Limited (DW8)
-
Envirosuite (EVS)
-
Hipages Group Holdings (HPG)
-
Spenda (SPX)
-
Symbio Holdings (SYM)
-
Volpara Health Technologies (VHT)
-
Vection Technologies (VR1)
And lastly, as we previously alluded to in our story on how to pick stocks, don’t forget you can stay abreast of index rebalances by following news on your favourite indices here.
For daily commentary, follow our global teams insights here.
