A number of shares could be on the move on Monday after S&P Dow Jones Indices announced its quarterly rebalance of the S&P/ASX Indices.
This will see a number of popular shares added and dumped out of our major indices.
Here is a summary of the change that will be effective at the open of trading on December 21:
The ASX 20 is home to the 20 largest listed companies on the Australian share market and will welcome payments company Afterpay Ltd (ASX: APT). The buy now pay later provider will take the place of insurance giant Insurance Australia Group Ltd (ASX: IAG).
Afterpay is also being added to the ASX 50 at the rebalance and will be joined by cloud-based business and accounting software provider Xero Limited (ASX: XRO). They will be replacing energy producer Oil Search Ltd (ASX: OSH) and retail property company Vicinity Centres (ASX: VCX).
The ASX 100 will welcome student placement company IDP Education Ltd (ASX: IEL), mining and mining services company Mineral Resources Limited (ASX: MIN), and plumbing parts company Reece Ltd (ASX: REH) later this month. They join at the expense of Flight Centre Travel Group Ltd (ASX: FLT), Iluka Resources Limited (ASX: ILU), and NIB Holdings Limited (ASX: NHF).
Finally, the ASX 200 will be welcoming online retailer Kogan.com Ltd (ASX: KGN) and plumbing parts company Reece Ltd (ASX: REH) at the open of trading on December 21. They will actually be replacing three shares in the index. This is due to the ASX 200 currently containing 201 shares following the Deterra Royalties Ltd (ASX: DRR) demerger from Iluka. Leaving the benchmark index are Avita Therapeutics Inc (ASX: AVH), Cooper Energy Ltd (ASX: COE), and Western Areas Ltd (ASX: WSA).
As fund managers often have strict mandates in relation to the shares they can buy, this news could give certain shares a boost and put pressure on others.
In addition to this, index-tracking funds will be needing to buy the additions and dump the removed shares from each respective index in the near future. This could also add pressure to the buy and sell sides, depending on the share.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited, Idp Education Pty Ltd, and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Avita Medical Limited, Flight Centre Travel Group Limited, and NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.