S&P rings in index changes

Standard & Poors makes changes to ASX indices

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published September 6, 2013 11:43 am AEST

As it does every quarter, Standard and Poors (S&P) is rebalancing its ASX indices, and this quarter there are plenty of changes.

In the S&P / ASX 100 Index (Index:^AXTO) (ASX:XTO), education group Navitas (ASX:NVT) and fund manager Perpetual (ASX:PPT) have been added. Making way for those two are three companies, iron ore miner Atlas Iron (ASX:AGO), rare earths miner and processor Lynas Corporation (ASX:LYC), and old media group News Corp (ASX:NWS).

Over the past year, Atlas shares have lost 36%, despite shipping 7.4 million tonnes of iron ore in the twelve months to June 2013. A weak operating performance saw underlying net profit come in at $13.7 million, an 81% fall compared to the previous year, and worse than the market had forecast. Atlas wants to expand output to 30 million tonnes annually, but is struggling to secure a rail haulage agreement, and that is also weighing heavily on the share price.

Lynas Corporation finally managed to get its rare earths processing plant up and running in Malaysia in the last financial year, but then rare earths prices plummeted below the cost of production. As a result, Lynas has decided to stockpile material, rather than sell at a loss. Over the past year Lynas shares have lost more than 40%.

News Corporation split itself into two separate companies. its publishing arm on is still know as News Corp while the other holds its lucrative film studio and cable television operations, and has been renamed 21st Century Fox.

Foolish takeaway

Perpetual is making a return to the ASX 100 after a long absence, thanks to a rising share price as equity markets improved. Navitas management will no doubt be delighted about their admission to the ASX 100 index, with both companies likely to see more interest from fund managers now.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

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