The S&P/ASX 200 Index (ASX: XJO) will soon have some new members.
After the market close on Friday, S&P Dow Jones Indices announced changes to the benchmark index effective prior to the open of trading on Monday 18 March.
This follows the financial market indices provider's March quarterly review.
Which shares are joining the index?
According to the release, audio visual solutions provider Audinate Group Ltd (ASX: AD8), gold miner Red 5 Ltd (ASX: RED), hotel technology company Siteminder Ltd (ASX: SDR), and coal miner Stanmore Resources Ltd (ASX: SMR).
This a big achievement for these companies and could give their shares a boost.
That's because many fund managers have strict investment mandates allowing them to only invest in shares on the ASX 200 index and above. This is to stop them from risking investor funds in anything speculative outside the benchmark index.
So, if they have been waiting in the wings for an opportunity to purchase Audinate et al, then now is their chance.
In addition, index funds that track the ASX 200 index will need to buy shares to reflect the changes that have been announced.
Which ASX 200 shares are being dumped?
If four shares are entering the ASX 200, it means that four are heading to the exits.
These will be mineral exploration company Chalice Mining Ltd (ASX: CHN), lithium miners Core Lithium Ltd (ASX: CXO) and Sayona Mining Ltd (ASX: SYA), and semiconductor company Weebit Nano Ltd (ASX: WBT).
Their exit could be bad news for their shares for the exact opposite reasons listed above. Fund managers and index funds may have to offload them in the near future.
Though, conversely, there's a small chance that this could yet prove to be a positive. With all four of these ASX 200 shares on the most shorted list, short sellers may be forced to buy shares to close positions if they're not allowed to short outside the benchmark index.
