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S&P rings in index changes

As it does every quarter, Standard and Poors (S&P) is rebalancing its ASX indices, and this quarter there are plenty of changes.

In the S&P / ASX 100 Index (Index:^AXTO) (ASX:XTO), education group Navitas (ASX:NVT) and fund manager Perpetual (ASX:PPT) have been added. Making way for those two are three companies, iron ore miner Atlas Iron (ASX:AGO), rare earths miner and processor Lynas Corporation (ASX:LYC), and old media group News Corp (ASX:NWS).

Over the past year, Atlas shares have lost 36%, despite shipping 7.4 million tonnes of iron ore in the twelve months to June 2013. A weak operating performance saw underlying net profit come in at $13.7 million, an 81% fall compared to the previous year, and worse than the market had forecast. Atlas wants to expand output to 30 million tonnes annually, but is struggling to secure a rail haulage agreement, and that is also weighing heavily on the share price.

Lynas Corporation finally managed to get its rare earths processing plant up and running in Malaysia in the last financial year, but then rare earths prices plummeted below the cost of production. As a result, Lynas has decided to stockpile material, rather than sell at a loss. Over the past year Lynas shares have lost more than 40%.

News Corporation split itself into two separate companies. its publishing arm on is still know as News Corp while the other holds its lucrative film studio and cable television operations, and has been renamed 21st Century Fox.

Foolish takeaway

Perpetual is making a return to the ASX 100 after a long absence, thanks to a rising share price as equity markets improved. Navitas management will no doubt be delighted about their admission to the ASX 100 index, with both companies likely to see more interest from fund managers now.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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