The S&P Dow Jones Indices periodically updates and rebalances its indexes to reflect the changing conditions of listed companies.
The ASX has seven major S&P indexes, including the ASX 20, ASX 200, ASX 300, and All Ordinaries.
Today, coincidence would have it that the most recent S&P rebalance came on a particularly brutal day on the market after two weeks of gains. This means for those being kicked out of a major index, the timing couldn’t have been worse, while for those being added on, it adds a small layer of defence against the tough sell-off.
Here are some of the changes to major indexes on the ASX. The changes come into effect as of June 22, 2020.
The All Ordinaries index is rebalanced once a year and is made up of 500 of the largest companies on the ASX.
Newest additions to the index include Air New Zealand (AIZ), which has maintained a steady share price recovery after the COVID-19-induced slump. PointsBet (PBH) has joined the All Ords ranks, as has The Reject Shop (TRS).
Next Science (NXS), PYC Therapeutics (PYC), and Reapp Health (RAP) are new additions representing the health care sector.
In the world of mining and exploration, Alkane Resources (ALK), De Grey Mining (DEG), Emerald Resources (EMR), and Legend Mining (LEG) are among the newly-added All Ords stocks.
Dubber (DUB), Netlinkz (NET), and Nitro Software (NTO) are some of the newest tech stocks on the index.
Of course, the new additions mean some stocks have lost their place in the index.
Cannabis companies Auscann (AC8) and Cann Group (CAN) have been kicked out. Decmil Group (DCG) and Panoramic Resources (PAN) have also been scrapped.
Embattled fintech company iSignthis (ISX) has been fighting a court battle against the ASX since December over its long-suspended shares. Today, the company was removed from the All Ordinaries and the ASX 300 indexes.
Cash Converters (CCV) is among those being kicked off the list, as is Regional Express (REX).
As for what’s commonly referred to as the “benchmark” ASX index, regenerative medicine company Mesoblast (MSB) has been added to the list. The $2 billion company recovered remarkably from its COVID-19 slump and is currently trading around its five-year high share price.
Century Industrial REIT (CIP) has joined Mesoblast, as has internet specialist Megaport (MP1). Gold miner Perseus Mining (PRU) is now part of the list alongside financials company Omni Bridgeway (OBL).
Being replaced by the new additions are aged care company Estie Health (EHE), superannuation company HUB24 (HUB), and lottery operator Jumbo Interactive (JIN).
Mayne Pharma Group (MYX), Pilbara Minerals (PLS), and Pinnacle Investment Management Group (PNI) are also leaving the index.
The top 100
As for the biggest players on the ASX, data centre provider NextDC (NXT) has joined the ASX 100 list along with gold mining giant Saracen Mineral Holdings (SAR).
Shopping centre stocks have had a tough run since the coronavirus closed stores across the globe. As such, European shopping centre operator Unibail-Rodamco-Westfield (UWR) is been scrapped from the ASX 100 list. Australia’s biggest independent coal producer, Whitehaven Coal (WHC), has also been removed.
Meanwhile, dairy company A2 Milk Company, which hit an all-time-high share price in April, is now an ASX 50-lister. A2M is replacing insurance giant AMP (AMP).
As for the elusive ASX 20 index, pokie machine maker and gambling giant Aristocrat Leisure (ALL) has kicked packaging giant Amcor (AMC) out of the list.
While the admission to any of these indexes does not impact company operations at all, the S&P indexes are a strong indicator of the current strength of a company and where it stands in comparison to the wider market.