Rudi's View | Nov 15 2019
Dear time-poor reader: Preview to S&P December index re-weighting and long term trends reflected in index changes
In this week's Weekly Insights (this is Part Two):
-Positive Momentum Continues For CSL
-Focus On Index Changes
-Focus On Index Changes (2)
-Tickets to Conference on Agricultural and Veterinary Biotechnology
-Rudi On Tour
[The non-highlighted items appeared on Thursday in Part One]
Focus On Index Changes
By Rudi Filapek-Vandyck, Editor FNArena
Index inclusions and exclusions can have a noticeable impact on share prices, in particular for smaller caps that either land on or fall off funds manager radars. Decision-makers at Regal Funds Management in particular have made it no secret they sometimes buy and sell around such index updates.
Standard & Poor's is scheduled to announce the next set of adjustments on 13th December, which is yet a while off, but this hasn't stopped some analysts already looking forward to what may eventuate.
At Wilsons, analysts believe Newcrest Mining ((NCM)) seems poised to replace South32 ((S32)) in the ASX20. They think it is also possible that AMP ((AMP)) loses its spot in the ASX50 to a2 Milk ((A2M)) while TPG Telecom ((TPM)) might be replaced by Saracen Mineral Holdings ((SAR)) in the ASX100.
Such changes would likely remain without direct consequences for the stocks involved.
Of more importance might be the predicted ASX200 inclusions for AP Eagers ((APE)), Avita Medical ((AVH)), Centuria Metropolitan REIT ((CMA)) and Perseus Mining ((PRU)) while Megaport ((MP1)), EML Payments ((EML)) and Ingenia Communities Group ((INA)) are also considered a possibility.
With the pending disappearance of Aveo Group ((AOG)) and Bellamy's ((BAL)) due to corporate action, both AP Eagers and Avita Medical are expected to be included sooner. As has now happened with the inclusion of the latter as of yesterday.
Stocks predicted to lose their inclusion in the index are Speedcast International ((SDA)) and Galaxy Resources ((GXY)), and potentially also Pinnacle Investment ((PNI)), Orocobre ((ORE)), and Estia Health ((EHE)).
Wilsons believes there will be a large number of changes when the next update for the ASX300 is announced in March next year, but we'll cross that bridge when we move closer to the date.
Analysts at Morgan Stanley report since March 2007, fresh index inclusions have outperformed the broader market by 7.2% over the period covering 20 days prior to the S&P announcement up to actual implementation.