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Liontown Resources, Cettire, Patriot Battery Metals and Weebit Nano are among a handful of companies gaining today because they are all being promoted into new market indices.
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The ASX indices are being rebalanced
On Friday night, S&P Dow Jones announced a quarterly rebalance of the S&P/ASX indices including the ASX 100, ASX 200, ASX 300, All Ords and All Tech Index.
These indices are regularly rebalanced to ‘ensure a highly liquid and tradable index is maintained’. In other words, to ensure the right companies are there.
Why is this a big deal? Because this triggers mandatory institutional buying of these companies and can lead to share price spikes. Conversely, stocks getting demoted can lead to share price bumps.
But today, it was mostly about the stocks being promoted.
Patriot Battery Metals and Weebit Nano are being added to the ASX 200
The biggest beneficiaries today were:
- Patriot Battery Metals (joining the ASX 200)
- Weebit Nano (ASX 200)
- Liontown (ASX 100), and
- Cettire (ASX 300)
All of these stocks have been highly publicised for various reasons, particularly forward progress on their various endeavours.
But now, institutions that could only sit on the fence up to this point can jump right in – and it seems they have done.
Some stocks have been demoted
For all the winners this morning, there were some losers. Many institutions sold demotee companies already because of poor performance, but this rubs salt into their wounds. The losers included:
- Baby Bunting (which is being removed from the ASX 300)
- BrainChip (which is being removed from the ASX 200), and
- Syrah Resources (which is being removed from the ASX 200.
All these changes won’t actually take effect for another couple of weeks. But it seems some investors are taking action in advance of the fait accompli that is to come.
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