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Why the Hub24 (ASX:HUB) share price is firing up 12% today

The Hub24 (ASX: HUB) share price is on fire today, rising more than 12%. Here’s what’s lighting this ASX 200 fire under Hub24.
The post Why the Hub24 (ASX:HUB) share price is firing up 12% today appeared first on The Motley Fool Australia. –

asx share price spark represented by smiling lady holding sparkler

The Hub24 Ltd (ASX: HUB) share price is on fire today, rising 12.32% to $24.25 a share at the time of writing.

Hub24 shares had closed last week at $21.62 a share but opened this morning at $22.80. They went as high as $24.85 soon after the open.

However, today’s strong move papers over what has been a rough and volatile month for this company. Backtrack exactly one month, and Hub24 was sitting at a new all-time high of $27.80.

However, the rout in ASX tech shares that we’ve seen over the past four weeks has not been kind to this company. By 5 March, the Hub24 share price was down to $19.48 a share, a near-30% drop from those previous highs.

On current pricing, Hub24 shares are up more than 23% from that low, but still more than 10% off of the highs of 15 February.

So what’s causing the partial redemption of the investment platform provider today?

Hub24 share price benefits from ASX 200 rebalancing act

Perhaps strangely for a share price move this substantial, Hub24 shares are not responding today to any news out of the company. In fact, we haven’t had any substantive official news from Hub24 all month.

No, Hub24 is moving today because of its inclusion in the ASX’s flagship index, the S&P/ASX 200 Index (ASX: XJO).

Ever 3 months, the ASX 200 is rebalanced by its administrator (S&P Global) so that the index accurately reflects the size of the companies that it tracks. If a company is among the largest 200 in Australia, chances are it will be included in the ASX 200 Index.

And that’s what happened to Hub24 this morning. S&P Global announced last week on Friday afternoon (after market close) that Hub24 had made the cut.

As we reported this morning, HUB24 joins Pilbara Minerals Ltd (ASX: PLS), Nickel Mines Ltd (ASX: NIC), Champion Iron Ltd (ASX: CIA) and Codan Ltd (ASX: CDA) as the ASX 200’s newest members.

These companies replace Service Stream Limited (ASX: SSM), Bravura Solutions Ltd (ASX: BVS), Smartgroup Corporation Ltd (ASX: SIQ), and Tassal Group Limited (ASX: TGR).

It’s not the index inclusion itself that really moves these companies’ share prices. But rather, it’s the exchange-traded funds (ETFs) that track the index. Index ETFs, such as the iShares Core S&P/ASX 200 ETF (ASX: IOZ), by mandate, have to reflect the ASX 200 accurately.

Since Hub24 is now in the ASX 200 (as of today), we have a whole range of large index funds buying HUB shares. Thus, we see a massive imbalance between buyers and sellers on the market. The result is a big move up for the Hub24 share price.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd and Hub24 Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd, Hub24 Ltd, Service Stream Limited, and SMARTGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Hub24 (ASX:HUB) share price is firing up 12% today appeared first on The Motley Fool Australia.

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