There’re a handful of ASX stocks including the Afterpay Ltd (ASX: APT) share price that could see buying interest next week.
This is when Standard’s & Poor (S&P) announces the changes to key stock benchmarks, including the S&P/ASX 200 Index (Index:^AXJO).
ASX investors should care. A number of studies have shown that new ASX entrants to stock indices tend to outperform in the weeks before and the months after their inclusion.
The opposite happens to ASX stocks that get bumped from these indices.
Rise of passive investments
One reason for this is the growth of index investing. Investors have been increasingly buying into exchange traded funds (ETFs) and other passive investing strategies that hug an index.
Their popularity is driven by the belief that the vast majority of active fund managers cannot beat the index over the longer term. Passive investments charge much lower fees than active managers.
As stocks are added into an index, these ETFs and passive managers have to buy the stock. By the same token, the opposite happens when an ASX stock is dropped.
ASX winners and losers
Another reason behind the performance trend is the fact that new index members tend to be moving from strength to strength. Hence their inclusion. Those that fall to the wayside have often been plagued by challenges.
This of course is unless an ASX stock is dropping out of a larger cap index into a smaller cap index.
Thus,REH
Other stocks that could also be included into the club are the Pointsbet Holdings Ltd (ASX: PBH) share price, Kogan.com Ltd (ASX: KGN) share price and Tyro Payments Ltd (ASX: TYR) share price.
Stocks that may be tossed out are the Avita Therapeutics Inc (ASX: AVH) share price, Cooper Energy Ltd. (ASX: COE) share price, Western Areas Ltd (ASX: WSA) share price and GWA Group Ltd (ASX: GWA) share price.
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More reading
- Kogan (ASX:KGN) share price falls on option grants to top execs
- Fund managers are snapping up these ASX stocks at a record pace
- ASX 200 up 1%: Domino’s rockets, Collins Foods delivers strong result, GPT offloads asset
- 3 ASX shares growing the dividend rapidly
- ASX shares looking awesome for next year: economist
Brendon Lau owns shares of Reece Australia Limited. Connect with me on Twitter @brenlau.
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited, Kogan.com ltd, Pointsbet Holdings Ltd, and Tyro Payments. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Avita Medical Limited, Flight Centre Travel Group Limited, Kogan.com ltd, and Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Why the Afterpay (ASX:APT) share price and these ASX stocks could get a boost next week appeared first on Motley Fool Australia.
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