The screens at the TMX Broadcast Centre in Toronto show the closing numbers of the TSX at +252.19 on July 3, 2012.Matthew Sherwood/The Globe and Mail
Don't get caught off guard when the S&P/TSX Composite Index rebalances this week.
With just one addition and three deletions it may seem like there won't be much change to Canada's main equity index, but a number of shuffles outside our borders will affect Canadian stocks, amounting to "an unusually high degree of activity," according to ITG Canada.
"If you're only following the S&P rebalance, you're missing a big part of the picture," said Chad Dale, a director for index and ETF research.
The high degree of turnover this quarter stems in large part from a delayed rebalance to FTSE indices. Usually they rebalance in December, but last year's was pushed back to March 2013 because of a methodology change. (This week's S&P/TSX Composite Index, by contrast, is simply part of the regular quarterly review.)
There's also a rebalancing of a few key exchange traded funds, such as Van Eck's junior gold miners index, of which 60 per cent of the stocks are Canadian names. B2Gold Corp. will be deleted from this ETF, and that means there's a "substantial buy" for the other names in the index.
Gold is a hot sector this quarter. The senior Gold miners ETF will also see some big changes, and that makes New Gold and Eldorado Gold significant buys.
REITs, however, should see some selling when the FTSE Small Cap index rebalances. Major names such as RioCan REIT and Dundee REIT will be affected.
As for the S&P/TSX Composite Index, the important name to watch is Element Financial Corp., which has been added to the index after soaring about 65 per cent in the past year.
(Tim Kiladze is a Globe and Mail Reporter.)
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Tim Kiladze