S&P/ASX indices June rebalancing – Who makes the cut, who gets booted *cough* Magellan
Link copied to
It is June already? It’s been a wild start to 2022 global equity markets, with hawkish central banks looking to contain rising inflation through hiking rates, supply change disruptions continuing and the war in Ukraine showing little sign of ending anytime soon.
The S&P Dow Jones Indices have released their June quarterly review and changes to their S&P/ASX indices effective prior to the open of trading June 20, 2022 with changes reflecting the level of market volatility.
Among indices reviewed the S&P/ASX 20 index which saw no change, the S&P/ASX 50, S&P/ASX 100, S&P/ASX 200 and the S&P/ASX All Technology Index.
S&P said there was an additional removal from the S&P/ASX 100 and S&P/ASX 200 following the demerger of Tabcorp (ASX:TAH) lottery spinoff The Lottery Corporation (ASX:TLC). The company made its debut on the ASX on May 24.
Indices are a keen indication of the financial health of a market or sector and can have a fairly significant impact on a stock. Companies can find themselves added or removed from ETFs and funds tracking indices so it’s well worth familiarising yourself with the various indices and how they are rebalanced. The last major rebalance was done in March with some indices rebalanced quarterly, others semi-annually or annually.
With interests in iron ore, lithium and manganese, miner Mineral Resources (ASX:MIN) found itself breaking into the S&P/ASX 50 Index.
MinRes has begun the environmental approval process for an extension of its Utah Point iron ore export supply, lodging a referral for the 10Mtpa Lamb Creek iron ore mine 130km northwest of Newman.
MinRes is the main user of Utah Point, a berth at Port Hedland designed to support the growth of the iron ore industry outside the majors. Its share price has risen ~23% in the past year to $59.64.
Block Inc (ASX:SQ2) found itself removed from the S&P/ASX 50 Index and has been feeling the pinch along with other BNPL stocks. The company disappointed the market with its March quarterly earnings, reporting a 22% decline on its revenue to $US3.96 billion for the quarter.
Ailing investment manager Magellan Financial Group (ASX:MFG) has dropped out of the S&P/ASX 100 Index in the latest review. Its latest update showed its funds under management had dropped by $3.6 billion in the last month from $68.6 billion on April 29 to $65 billion on May 31. The news has sent its share price tumbling more than 20% in the past five days to $12.85.
Artificial intelligence firm BrainChip Holdings (ASX:BRN) was added to the S&P/ASX 200 Index along with some lithium stocks and a coal miner. Ousted though were fintech, BNPL and biotech stocks, hard hit by the recent sell off in high growth stocks as investors seek safer haven value during times of economic volatility.
Prompted by the rapid increase in ASX listed tech stocks over recent years, the S&P/ASX All Technology Index (ASX:XTX) was designed to be a smaller, localised version of the US-based Nasdaq Composite Index (NASDAQ: .IXIC) while being more inclusive and broader than the existing S&P/ASX 200 Information Technology Index (ASX: XIJ).
It has been rather bleak for the S&P/ASX All Technology Index which has fallen ~33% year to date compare with the S&P/ASX 200 down ~5% year to date. There were no additions to the index, rather companies just finding themselves booted in a sign of the times.
After a ~72% fall in its share price in the past year, online cosmetics retailer Adore Beauty (ASX:ABY) will no longer be on the index.
Health imaging company Volpara Health Technologies (ASX:VHT), which specialises in the early detection of breast cancer, also found itself removed. The company recently posted its FY22 result, which was in line with expectations.
Volpara reported revenue of NZ$28.7m, including operating revenue of NZ$26.1m up 32% on pcp and grant revenue of NZ$2.6m, slightly ahead of expectations. However, the selloff in tech and health stocks has its share price down ~37% year to date to 66 cents.