Banks Move Out as New Economy Joins Euro Stoxx 50 Benchmark

(Bloomberg) -- Societe Generale SA and Banco Bilbao Vizcaya Argentaria SA are losing their places in one of Europe’s main stock benchmarks, another blow to the erstwhile heavyweight banking sector just two years after Deutsche Bank AG was ejected.

The two banks will be removed from the Euro Stoxx 50 Index of blue-chip stocks, according to a statement by index provider Stoxx Ltd. Meanwhile, Dutch payment company Adyen NV and internet investor Prosus NV are moving in.

Further changes to the index include the removal of Fresenius SE, Telefonica SA and Orange SA, while Vonovia SE, Pernod Ricard SA and Kone Oyj will be added. The changes will take effect on Sept. 21.

While the third quarter usually brings more changes to Stoxx’s benchmarks as the hurdles to join or be removed are lower then during the other reviews, this year’s overhaul is the biggest change to the index membership in more than two decades as the virus pandemic accelerated investors’ appetite for growth stocks. Index membership is based on free-float adjusted market value at the end of August.

Inclusion in widely followed indexes is becoming more important for companies in a world increasingly dominated by passive investment funds. Bank of America Corp. strategists predict that equity assets in index-tracking funds will surpass actively managed portfolios in August 2021.

A stock’s expulsion from the index will force passive investors to sell as they realign portfolios to include the gauge’s new constituents.

©2020 Bloomberg L.P.