Evolution Mining is set to headline the Australian Securities Exchange’s quarterly index rebalance, scheduled for announcement next Friday and to take effect two weeks later. The gold producer, which operates mines across Australia, has seen its share price soar 84% this year, driven by strong investor demand for gold as a safe-haven asset amid ongoing global market volatility.
According to analysts at Morgan Stanley, Evolution will replace lithium producer PLS (formerly Pilbara Minerals) in the ASX 50. The investment bank also flagged gold producers Perseus Mining and Genesis Minerals as potential entrants to the S&P/ASX 100, although the probability of their inclusion is considered lower. Shares in Perseus and Genesis have risen by 50% and 85% respectively in 2024.
“Index rebalances are increasingly driving significant market movements, particularly among passive investors,” said Phillip Hudak, portfolio manager for Australian small companies at Maple-Brown Abbott. “When a company enters the ASX 200 or ASX 100, it often triggers a wave of passive flows and can act as a catalyst for further price momentum.”
Gold Stocks Drive Market Rebalancing
Gold miners have outperformed much of the Australian market this year, buoyed by soaring gold prices as investors react to global uncertainty, including geopolitical risks and the lingering effects of U.S. trade tensions. The price of gold has climbed more than 25% in 2024, reaching record highs.
This rally has already had a tangible impact on ASX indices. In the March rebalance, Spartan Resources was added to the S&P/ASX 200, while Catalyst Metals, Ora Banda, and Pantoro joined the S&P/ASX 300.
The S&P/ASX 200 remains the most closely watched index in quarterly reviews, as most passive investment flows are benchmarked against it. Analysts note that traders often seek to capitalize on index movements by positioning ahead of announcements.
Morgan Stanley’s research indicates that stocks added to the ASX 200 typically deliver positive returns both on the day of the rebalance announcement and in the weeks leading up to implementation. The strongest returns were observed during the 20-day period before the announcement through to the rebalance date.
Additional Changes Under Consideration
Looking ahead to the June rebalance, Morgan Stanley has identified three potential but less likely changes to the ASX 200: the inclusion of furniture retailer Nick Scali, shipbuilder Austal, and mining services group Perenti. These additions would potentially come at the expense of Stanmore Resources, Clarity Pharmaceuticals, and Lifestyle Communities.
Meanwhile, the S&P/ASX 300 and All Ordinaries indices are not part of the upcoming review, as they are rebalanced on a semi-annual basis, in March and September.
Gold’s Growing Weight in Smaller-Cap Indices
The influence of gold producers is particularly pronounced in the small-cap segment of the market. Gold stocks accounted for nearly 17% of the S&P/ASX Small Ordinaries Index last month—up significantly from 6% in prior years.
“Many smaller gold miners have been expanding production while effectively managing costs,” Hudak said. “With current gold prices, these companies are generating strong margins, creating a favorable operating environment.”
As gold continues to outperform and investor interest remains high, market participants can expect further reshaping of Australia’s equity indices, with gold producers firmly in focus.
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