Why is the AVZ Minerals share price making news on Monday?

The AVZ Minerals Ltd (ASX: AVZ) share price is currently halted at 78 cents each.

Shares of the mineral exploration company have been voluntarily halted since May. Last week, the company applied for an extension of this halt until 15 September, or until an earlier announcement is made.

Today, AVZ is making waves for a different reason: being removed from one of Australia’s most important stock indexes, the S&P/ASX 300 Index (ASX: XKO).

So why was AVZ Minerals given the boot?

AVZ Minerals booted from ASX 300

S&P Global announced a rebalance of all of its S&P/ASX indices on Friday last week. As part of this process, AVZ Minerals was removed from the index containing the ASX’s largest 300 companies.

Counting AVZ Minerals, 12 companies were removed from the index in total, spread across a broad range of sectors.

A company is added or removed from the ASX 300 due to changes in its market capitalisation. This means that at least 300 other companies have a higher market capitalisation than AVZ Minerals at the time of writing.

A trading halt doesn’t affect whether a company is delisted from the ASX 300 directly, but a frozen share price could put it in danger of its market capitalisation being overtaken by shares in a sector undergoing a strong rally.

The S&P/ASX 200 Energy Index (ASX: XEJ), for example, is up 35.72% year to date, while most of the other indices are in the red. Since energy shares performed strongly this year, this is also likely to have pushed some of the weaker-performing shares, such as AVZ Minerals, out of the index.

AVZ Minerals share price snapshot

The AVZ Minerals share price is down 11.36% year to date. Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) is also 10.19% lower.

The company’s current market capitalisation is around $2.75 billion.

The post Why is the AVZ Minerals share price making news on Monday? appeared first on The Motley Fool Australia.

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More reading

• Why these 3 ASX shares could be in for a massive boost this month
• 5 things to watch on the ASX 200 on Monday
• AVZ shares are still frozen. What’s going on?
• AVZ Minerals shares are scheduled to resume trading this week. Here’s what to watch

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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