Evening all and hope xmas was full of family time and big things are planned for 2026.
Whilst there is a frustration tone amongst the long termers it is understandable. My frustrations are that I got greedy with Mercedes and didnt sell a small parcel to be free carried and now, like Dodgy knees, will likely go down with the ship if widescale adoption (sales) is further out than previously hoped.
However we do have one hurdle ahead of us. The third Friday in March 2026 will see the ASX300 rebalance occur. I think we were outside last September but stayed in, but now, not sure with the price heading in the wrong direction, that will be the case in March.
According to Market Index we are at the moment 610/2319 on the ASX rankings and are ranked 37/252 in the sector (
https://www.marketindex.com.au/asx/brn?src=search-all)
Obviously a rebalance of the ASX 300 will see intuitional investments (compelled to) sell shares of those companies leaving and buy into those new companies entering. Thus creating lots of fluidity. (see below)
Lets hope that we have some news that pops our head back into the ASX300 limit to remain otherwise we may have another hiatus where the shares are hammered and shorters thrive. In addition if that was to occur then I also see the bonus not being paid to the CEO (if the $9m sales aren't shown) and one would have to question the continuance of the CEO as I believe his 5yr contract expires in Nov 2026 (Started Nov 2021).
Anyway let hope the above scenario doesn't play out, the specific amount of $9m was a realistic target based on prior engagements and we do get some tit bits in January and February to get the share price moving north.
For those Perth people enjoy the milder weather and have an excellent NYE.
ASX rebalancing can have a major impact on a stock's performance. We look at how the ASX indices are re-balanced and the implications.
stockhead.com.au
Rebalancing indices
Exact methodology for inclusion in certain indexes and rebalancing is quite complex considering a range of factors including market cap and liquidity and can also be found on
the S&P Global website.
However, it is worth noting just how often they are rebalanced. While some are done quarterly, others are done semi-annually or annually.
The S&P/ASX 20, S&P/ASX 50, S&P/ASX 100, S&P/ASX 200, S&P/ASX All Australian 50, and S&P/ASX All Australian 200 indices are all rebalanced quarterly.
The rebalancing happens on market close on the third Friday of March, June, September, and December.
“On these days, due to the rebalance, the turnover in terms of dollar value traded on ASX and globally is vastly above normal,” Hannah said.
“If a company is coming in or out of the ASX 200, it will affect the share price.”
The market is informed of the upcoming changes one week in advance, or two weeks in the case of the September change.
The AXS 300 is re-balanced semi-annually, effective after the market close on the third Friday of March and September.
The All ordinaries is re-balanced only once annually in the March quarter, which means a significant number of additions and removals.
Winds of change
The indices change and evolve as do companies change and evolve. Companies that grow can find themselves added to indices, while ones which shrink removed.
Hannah said if companies are added to an index or multiple ones it presents a range of opportunities and if removed the repercussions can be significant. Companies can find themselves added or removed from ETFs and funds tracking indices.
“Rebalances present massive liquidity events in markets, as all ETF providers are looking to trade their portfolio to match the updated indices,” he said.
He said ETF providers will aim to trade the changes on the close of the rebalance day.
“However, if the position to be traded is so large that it cannot it be filled on the actual re-balance day, then the fund manager will be required to trade over multiple days,” he said.
“The implication is that if a share is coming in or out of an index, it might see sustained buying or selling pressure which can impact the share price.”
The all important S&P/ASX 300 index
TheS&P/ASX 300 is a significant index. It is one that many fund managers or investors use as a cutoff for investments. Entering the S&P/ASX 300 can be a major milestone for companies, signifying they have actually entered the big league.
The
Vanguard Australian Shares Index (ASX:VAS) seeks to replicate the index.
Vanguard Asia Pacific chief investment officer Duncan Burns told
Stockhead full replication is the purest form of indexing, where an index manager holds all the securities in the portfolio at or close to their index weight.
“For instance, at the recent balance on March 18 VAS, Vanguard’s $28bn flagship Australian shares fund/ETF fund held all 301 (yes, 301 that occasionally happens) lines of the ASX 300 benchmark at or very close to benchmark weight, give or take 0.01% to 0.02% at the security level,” Burns said.
“So starting at the top of the ASX, you have the major banks and miners with a market cap of hundreds of billions, all the way down to the last few securities of the 300, with a market cap of around one billion.
“As a result, VAS contains all 300 securities (or 301 securities for accuracy as at March 18) in percentages according to their market cap.”
Standard strategic takeover range (most plausible)
Verdict
A$510m – A$590m
High-conviction / urgency scenario (credible catalyst present)
Blue-sky / defensive block (rare but real)
The uncomfortable truth (but important)
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