Air Canada, Air Transat and WestJet are three of the 38 Canadian companies to join Russell Investments’ indexes this year.
They will be incorporated into the Russell Global Index when the annual reconstitution for Russell’s U.S. equity indexes concludes on June 27.
The full list of projected additions and deletions are available here. Of the 38 new Canadian companies joining, 11 are energy companies and five are from the financial services sector. These two sectors had the biggest increase in weighting within Canada since last year’s reconstitution, gaining 2.2 and 0.84 percentage points, respectively.
Other Canadian firms aren’t so lucky—Boston Pizza, Sprott Resource Corp. and Kirland Lake Gold Inc. are scheduled to be deleted. The materials and processing sector had the largest loss since last year, decreasing its weighting by 3.4 percentage points. A notable departure is Potash Corp. whose stock struggled after the breakup of the Belarusian Potash Company cartel, while high-flying Valeant Pharmaceuticals was a new entrant to the Canada Top Ten.
“Changes at this year’s Russell Indexes reconstitution for Canada reflect a market led by energy and banks on the heels of an improving U.S. economy,” says Shailesh Kshatriya, associate director, client investment strategies at Russell Investments Canada Limited. “Going forward, we believe these two sectors will play a pivotal role in the outcome of the domestic benchmark as well as the Canadian economy.”
The Canadian equity market increased 16% from May 31, 2013 through May 30, 2014, and now stands at $2.1 trillion in total market capitalization.
Of the 846 new additions to the Russell Global Index at reconstitution (41 of which are initial public offerings, or IPOs), the U.S. gained the largest number of new companies through the reconstitution process (148) followed by Taiwan (68), China (67) Japan (59) and the United Kingdom (56). The U.S. led all Russell Global Index country constituents in IPO additions at reconstitution with 27, followed by the UK (7), and China (5).
The Russell 3000 Index and Russell Microcap Index are also being reconstituted.