The companies that are in and out of key ASX indices have been announced, with the Gina Rinehart-backed Lynas Rare Earths Ltd (ASX: LYC) and Washington H. Soul Pattinson and Company Ltd (ASX: SOL) soon to join the S&P/ASX 50 Index (ASX: XFL).
The most recent rebalance of the ASX indices is set to take effect from December 22, with the additions and exclusions to each index important for funds that look to track those indices.
As such, an inclusion can be a boon for shareholders, while an exclusion can put downward pressure on a company's share price performance.
With Lynas and Soul Patts to be included in the ASX 50, two companies, Amcor Plc (ASX: AMC) and Mirvac Group (ASX: MGR), will be removed.
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China moves spur interest in Lynas
Lynas shares have been trading between $13 and $16 for the past month or so, after surging to a 12-month high of $21.96 in mid-October at a time when China flagged extra export controls on key rare earths elements.
The shares are still well up on the 12-month lows of $6.16, and Macquarie recently issued a research note maintaining its outperform rating for the stock, with a 12-month price target of $17. The shares closed Friday's session at $14.14.
As for the S&P/ASX 100 Index (ASX: XTO), vehicle dealership owner Eagers Automotive Ltd (ASX: APE) will be included in the next rebalance, as will Capricorn Metals Ltd (ASX: CMM).
The $7.57 billion Eagers, in recent months, announced a major capital raise at $21 per share to help pay for its $1.04 billion 65% buyout of CanadaOne Auto Group, with the shares continuing to trade well above that level, last changing hands for $26.84.
Analysts have looked kindly on the CanadaOne purchase, with Macquarie in early November saying the "acquisition of CanadaOne provides a platform for further North American inorganic growth, in what is a highly fragmented market''.
At the time, Macquarie had a price target of $29.98 on Eagers stock.
As for Capricorn Metals, its shares are up more than 100% over the past 12 months, during which time it acquired its Mt Gibson gold project where it has grown the mineral resource estimate to 4.5 million ounces of contained gold.
The company also recently acquired Warriedar Resources for an equity value of $188 million.
To make way for Eagers and Capricorn, Reece Ltd (ASX: REH) and Reliance Worldwide Corporation Ltd (ASX: RWC) will be removed from the ASX 100.
There will be no changes to the S&P/ASX 20 Index (ASX: XTL) this time around.
