Why these 3 ASX shares could be in for a massive boost this month

Outstanding company performance and favourable economic conditions are obviously fantastic for ASX shares.

But occasionally stocks might get a nice boost from an unexpected circumstance.

That’s exactly the great fortune Johns Lyng Group Ltd (ASX: JLG), Sayona Mining Ltd (ASX: SYA), and Lovisa Holdings Ltd (ASX: LOV) investors find themselves in this month.

That’s because those three ASX shares have been named as new additions to the S&P/ASX 200 Index (ASX: XJO).

They will be welcomed into the flagship index before trading begins on Monday 19 September.

Not just prestige, but actual practical ramifications

So why is joining the ASX 200 such a boon for stocks?

That’s because passive funds that follow the index are forced to buy the shares, thereby pushing up demand.

And of course, the share price heads upward as demand increases.

This will be some relief for investors of insurance building repairer Johns Lyng. The price for that stock has dipped 15.5% over the last couple of weeks.

Shareholders for lithium producer Sayona Mining will be glad too, with that stock losing about a third of its value since 19 April.

Lovisa shares have gained a whopping 71% since mid-June, so the ASX 200 addition could light another fire under the rocket.

More to watch

Those three stocks aren’t the only ones entering the exclusive 200 club though.

Investors may keep an eye on these other companies to see how they might move as 19 September approaches:

• Capricorn Metals Ltd (ASX: CMM)
• Charter Hall Social Infrastructure REIT (ASX: CQE)
• Karoon Energy Ltd (ASX: KAR)
• Smartgroup Corporation Ltd (ASX: SIQ)
• Spark New Zealand Ltd (ASX: SPK)

Conversely, for each stock that’s added to the ASX 200, one gets removed.

And that’s potentially bad news for those companies, as passive funds that follow the index are forced to sell.

When supply increases, the share price dips.

So watch out if you’re holding any of these ASX shares, which will be kicked out of the ASX 200 on the morning of 19 September:

• Life360 Inc (ASX: 360)
• AVZ Minerals Limited (ASX: AVZ)
• City Chic Collective Ltd (ASX: CCX)
• Clinuvel Pharmaceuticals Limited (ASX: CUV)
• EML Payments Ltd (ASX: EML)
• Janus Henderson Group CDI (ASX: JHG)
• Pointsbet Holdings Ltd (ASX: PBH)
• Zip Co Ltd (ASX: ZIP)

The post Why these 3 ASX shares could be in for a massive boost this month appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Zip shares on watch amid ASX 200 ousting
• 5 things to watch on the ASX 200 on Monday
• Zip and these shares have been kicked out of the ASX 200 index
• Here are the top 10 ASX 200 shares today
• Why Core Lithium, Mineral Resources, PointsBet, and Strike Energy are dropping

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group Limited and Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended EML Payments, Johns Lyng Group Limited, Life360, Inc., Pointsbet Holdings Ltd, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended EML Payments and SMARTGROUP DEF SET. The Motley Fool Australia has recommended Johns Lyng Group Limited, Lovisa Holdings Ltd, and Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/3NT9L7o