ASX 200 list company changes

[ozambersand]

Could someone please enlighten me to the ramifications of a company's inclusion in the ASX200.

I read somewhere (I think) that superannuation companies have to hold some of all ASX200 stock. Is that correct?

When do companies move in and move out of the ASX200? Who makes this decision and what criteria is it based on? Is it like football premiership league tables where the bottom 10 on market capital go out and the top 10 of the balance of the ASX300 move in?

I assume companies really want to be included if I am correct that it ensures Super funds will have to buy some of your shares.

What made me curious was that I was looking at a company called Emeco Holdings (a ASX200 company) which rents out heavy machinery in Western Australia. It's never been mentioned on ASF according to my search. I wonder why it is included in the ASX200 when other bigger companies are not.

Looking at its last announcement from AMP, it is just a huge list of different arms of AMP buying and selling its shares over the same period.

Is AMP using it as a day trader?

I'm not bad-mouthing the company or commenting in that regard, just curious as to what is going on?

There are a couple of other companies that are really down on previous year's figures eg Kimberley Diamonds and Bendigo Mining. Will they stay in the ASX200?

 

[Julia]

Re: ASX200 list company changes

I can't comment on whether or not superannuation companies are required to hold companies in the ASX200 but it sounds very unlikely. Presumably there would be super funds which are in fact based on that index.

You will find all the information you want about how the indexes are constituted on Standard & Poor's website, plus additional info on the ASX website.

Essentially inclusion in the various indices is by market capitalisation and therefore the companies in each index will alter subject to the rises and falls in their share prices.

 

[stoxclimber]

Re: ASX200 list company changes

I'm quite sure there is no requirement re: holdings. However, as the fund companies aim to be able to slightly outperform the relevant benchmark (e.g. S&P/ASX200 AI) they essentially hold the basic index with slight variations depending on analyst views.

 

[reece55]

Re: ASX200 list company changes

The attached document should give you all the information you require....

But briefly, Julia is right, weighted by market cap and adjusted every so often (I think each quarter??). XJO represents about 84% of our market movement, so fairly reliable as an indicator for the movement in AUs.

If super funds have to hold a certain % of the index, this would be determined by the funds investment mandate. I don't know of any restriction legislatively that would be able to enforce such a restriction.

Cheers
Reece

 

[doctorj]

Re: ASX200 list company changes

When a company is included in the 200, it generally gets more press (eg AFR), more analyst coverage and in some circumstances as you mention, more funds on their register.

The latter tends to happen as its not uncommon for funds to restrict their direct ownership in shares to the top 200 as they believe it limits risk also, there are a number of funds that attempt to track the market and therefore need to rebalance portfolios as stocks are added and removed.

 

[ozambersand]

Re: ASX200 list company changes

Thanks guys, should have done my own research.

The fact that funds have products linked to the index would explain why they had the shares in the company and why companies would be keen to be included. As the S&P article kindly posted by Reece says:

Inclusion in the index generates
significant institutional interest for constituents, and proliferates widespread media and buy/sell side analytical coverage.

This bit indicates it is not just market capitalisation determining whether they stay in:

The fixed number of stocks also ensures minimum turnover as changes are made due to corporate activity or a reduction in a stock’s size or liquidity that makes it ineligible for inclusion.

This bit answers my question on how they go in and out:

Additions. An index addition is generally made only if a vacancy is created by an index deletion. Index additions are made according to market size and liquidity. An initial public offering (IPO) is added to the index only when an appropriate vacancy occurs and is subject to proven liquidity for at least two months. An exception may be made for extraordinary large global offerings where expected trading volume justifies inclusion.
For all indices, with the exception of the S&P/ASX 300 and the All Ordinaries, an addition is made as soon as a place has been vacated due to an index deletion.
Deletions. Deletions can occur due to acquisitions, mergers and spin-offs or due to suspension or bankruptcies. The decision to remove a stock from the index will be made once there is sufficient evidence that the transaction will be completed. Deletions of stocks due to ergers & acquisitions activity are removed from the index at the best available price in the market.

Could my other question about why the AMP super funds would be trading backwards and forward in the stock be explained by the fact that they do that with all their stock but their holding is not usually such a high percentage of the company that they have to report it?

 

[Julia]

Re: ASX200 list company changes

Have you considered simply asking AMP the question?

 

[ozambersand]

Re: ASX200 list company changes

Further to the previous post, I found this today which will explain why some of the ones downgraded from the various indices lost ground today (eg Iluka)
S&P/ASX 50
ADDITIONS
NWS - NEWS CORPORATION
REMOVALS
BLD - BORAL LIMITED
S&P/ASX 100
ADDITIONS
BLY - BOART LONGYEAR LIMITED
NWS - NEWS CORPORATION
REMOVALS
ILU - ILUKA RESOURCES LIMITED
RMD - RESMED INC
(Resmed is being included in S&P200 but not sure what is happening with ILU)
S&P/ASX 200
ADDITIONS
BLY - BOART LONGYEAR LIMITED
NWS - NEWS CORPORATION
SGT - SINGAPORE TELECOMMUNICATIONS LIMITED
MCR - MINCOR RESOURCES NL
QGC - QUEENSLAND GAS COMPANY LIMITED
SMY - SALLY MALAY MINING LIMITED
REMOVALS
API - AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED
ARQ - ARC ENERGY LIMITED
BDG - BENDIGO MINING LIMITED
KCN - KINGSGATE CONSOLIDATED LIMITED
KIM - KIMBERLY DIAMOND COMPANY NL
TWR - TOWER LIMITED
S&P/ASX 300
ADDITIONS
BLY - BOART LONGYEAR LIMITED
NWS - NEWS CORPORATION
SGT - SINGAPORE TELECOMMUNICATIONS LIMITED
REMOVALS
NONE
It is like a soccer! You could have predicted it if you had been watching the indices closely.

 

[Smurf1976]

Re: ASX200 list company changes

Does anyone know a convenient place to get a list of all stocks in a particular sector within an index?

For example, all Materials stocks in the ASX200 or all Energy stocks in the ASX300.

It used to be easy to sort them on the S&P website but I don't seem to be able to do that anymore since they changed the site.

 

[SteeleBryant]

Re: ASX200 list company changes

Does anyone know a convenient place to get a list of all stocks in a particular sector within an index?

For example, all Materials stocks in the ASX200 or all Energy stocks in the ASX300.

It used to be easy to sort them on the S&P website but I don't seem to be able to do that anymore since they changed the site.

You might be able to find something at the AFR smart investor website.