Mark your calendar: The $2.3 billion reshuffle that could move ASX stocks

Mark your calendar for 5 September 2025 — the date of the next S&P/ASX index rebalance announcement.

With billions now tied to passive strategies such as the Vanguard Australian Shares Index ETF (ASX: VAS), inclusion or exclusion from a major index like the ASX 200 or 300 often means one thing: forced flows.

According to Morgan Stanley, this September’s rebalance could trigger more than A$2.3 billion in trades, with around A$1 billion concentrated in new inclusions. The changes will take effect on 19 September, and could ripple through every tier of the ASX index hierarchy, including the S&P/ASX 20, 200, 300 and Small Ordinaries.

So who’s in, who’s out, and what does it mean for your portfolio? Let’s dive into Morgan Stanley’s predictions - guided by their index probability model.

Inclusion in these indices means one thing: forced buying from index trackers, which often pushes prices higher in the days surrounding the effective date.

Largest notional trades

Below, Morgan Stanley outlines the stocks most likely to benefit from passive inflows — and those at risk of sharp outflows. As is often the case with index rebalances, strength begets strength: stocks with positive momentum stand to attract more capital, while laggards risk being pushed further to the sidelines.

Notably, Greatland Gold (ASX: GGP) — backed by the Forrest family — Droneshield (ASX: DRO), a rising player in the defence sector, and EBOS Group (ASX: EBO), a major healthcare distributor and marketer, are projected to receive the largest passive allocations, with over $300 million in combined notional inflows.

ASX 100 - Potential changes

Inclusions

Deletions

"Our higher probability scenario includes the potential removal of IDP Education (ASX: IEL) as the lowest ranked at 128, having seen its float-adjusted market cap (size) fall from A$3,668.5mn to A$1,007.6mn over the past 6-months, a decline of 73%, followed by Orora (ASX: ORA) at 123, which has also seen its size adjust, though with a smaller magnitude of negative 18%," Morgan Stanley's strategists wrote.

Flight Centre (FLT) sees a lower probability of removal, given its decline over the past year.

ASX 200- Potential changes

Inclusions

• GGP, DRO, EBO and Dalrymple Bay Infrastructure (ASX: DBI) are all forecast to enter the S&P/ASX 200. 
• Catalyst Metals (ASX: CYL) and Perenti (ASX: PRN) could also enter, but the probability is lower based on Morgan Stanley's numbers.

Deletions

ASX 300 - Potential changes

Inclusions

• GGP, Bravura Solutions (ASX: BVS), Aspen Group (ASX: APZ), Firefly Metals (ASX: FFM), Universal Store (ASX: UNI), Black Cat Syndicate (ASX: BC8): All comfortably within the inclusion range.
• Lower probabilities assigned to Qoria (ASX: QOR), Southgold Consolidated (ASX: SX2), Cuscal (ASX: CCL), and Green Technology Metals (ASX: GT1): Hovering just outside the buffer.

Deletions

• Cettire (ASX: CTT), OFX Group (ASX: OFX), Novonix (ASX: NVX), Platinum Asset Management (ASX: PTM), Coronado (ASX: CRN), Star Entertainment Group (SGR), Ioneer (INR): All ranking below the 300 threshold on a float-adjusted basis.
• Lower probabilities are assigned to Monash IVF (MVF), SkyCity (SKC), Lotus Resources (LOT), Kogan.com (KGN), and Weebit Nano (WBT). They lack sufficient liquidity or market cap to maintain eligibility.

Small Ordinaries - Potential changes

The Small Ords Index is most affected by inclusions and exclusions from the ASX 100 and 300:

Inclusions: 

• GGP again. But also APZ, FFM, BVS, UNI, BC8. All join via ASX 300 inclusion.

Re-entries

• ORA, FLT and IEL fall from grace but nonetheless became opportunities for small and mid-cap investors.

Departures

• RMS, GMD, and CMM: Promoted to the ASX 100.
• Multiple others fall out due to ASX 300 removal, including CTT, OFX, NVX, PTM, SGR, and INR.

Sectors on the move: Discretionary gains, Materials retreats

If Morgan Stanley’s base case plays out, this rebalance will have a noticeable sector impact - particularly in the Small Ords.

The discretionary sector would grow by 107 basis points, while the materials sector would decline by 204 basis points due to the departures of RMS, GMD and CMM into the ASX 100.

Despite the drop, Materials will remain the largest Small Ords sector by weight at 22.1%, while Discretionary climbs to 15.5%, solidifying its position as the second-largest sector.

Coming soon: S&P methodology shake-up

Morgan Stanley notes that S&P Dow Jones Indices has proposed three major rule changes to its index methodology:

1. Shorten the evaluation window from 6 months to 3 months for market cap and liquidity criteria.
2. Introduce a two-way buffer, allowing quicker inclusions as well as removals.
3. Lower the minimum Investable Weight Factor (IWF) from 0.30 to 0.15, broadening eligibility to firms with larger strategic holdings.

If implemented in time for this rebalance, one major beneficiary would be GQG Partners (ASX: GQG). With a float-adjusted market cap of $1.6 billion and IWF of 0.26, it is currently excluded - but would qualify for the S&P/ASX 200 under the proposed rules.

How the model works — and why it matters

Morgan Stanley uses a probability-weighted index model to forecast additions and deletions. The model ranks stocks based on float-adjusted market capitalisation, liquidity metrics, and buffer thresholds to estimate the likelihood of inclusion or exclusion at each index tier.

And these changes matter. Looking at data from March 2007 to June 2025, Morgan Stanley found:

• Additions to the ASX 200 returned an average of +6.4%, outperforming the broader benchmark by +6.9%.
• Deletions often saw a post-implementation bounce, averaging +3.8%.