Brokers brace for gold index changes [IMG] Street Talk. Supplied...

Brokers brace for gold index changes
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Street Talk. Supplied

• by
  
• Sarah Thompson
  
• Anthony Macdonald
  
• Joyce Moullakis

Few sectors are more impacted by index changes than gold.
And with changes coming to the Global Junior Gold Miners index (GDXJ), brokers reckon fund managers should look out for some heavy trading in Australian-listed gold stocks as the big exchange traded funds reposition portfolios.
"Macquarie's index team believes the changes will result in around US$2.5bn in market turnover in gold equities," Macquarie analysts told clients on Tuesday morning.
"Within our coverage universe OGC, NST and EVN look to be the key beneficiaries with AQG, BDR and PRU suffering a negative impact."
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Expected buying and selling caused by changes to the Global Junior Gold Miners index, according to Macquarie analysts.
Northern Star, OceanaGold and Evolution Mining should see buying, with the $US1.5 billion market capitalisation upper limit no longer applying to the juniors' index.

Macquarie said the trio should also retain their positions in the $US12.5 billion GDX exchange traded fund.
RBC Capital Markets analysts agreed that those companies already in the GDXJ were likely to be downgraded.
"This could have negative price impact as the lower weighting would result in less stock held by ETF providers. This change in criteria goes some of the way to address ETF providers' ownership levels with some stocks breaching the 20% threshold (with respect to compulsory takeover notices)," the analysts told clients.