Trading on an public exchange is one thing, but getting added to a stock index is a whole other animal.
Stock market indexes, like the S&P 500, Dow Jones Industrial Average (DJIA), and the Canadian Securities Exchange’s (CSE) Composite Index, are lists or ‘portfolios’ of stocks on an exchange, or multiple exchanges, used as a benchmark to track market health and performance.
For instance, the S&P 500 consists of 500 equities trading on the NYSE or NASDAQ with market caps greater than US$6.1 billion.
There are 646 stocks, outside of the financial sector, trading on NASDAQ with market caps of US$10.0 billion or greater. That’s just NASDAQ, so naturally a committee at S&P is responsible for selection based on things like liquidity, public float and how long the company has been publicly traded.
It is because of this extensive vetting that global analysts consider the S&P 500 a canary in a coal mine when it comes to the American economy. This perceived stability leads to things like index funds and exchange-traded funds (ETFs).
Index funds and ETFs often use indexes like the S&P 500 as a template for their investment portfolio. Since funds tracking the S&P 500 are obligated to buy shares in each of the companies added to the index, these corporations can experience a share price bump from the added institutional support.
Being part of an index also bestows a sense of legitimacy on the companies being included in the list, so when it happens, it’s kind of a big thing for those involved.
Being part of CSE’s Composite Index also created an opportunity for company CEO, Rosy Mondin, to work with the CSE on marketing initiatives to raise public awareness for both Quadron and the exchange. The two parties continue to collaborate with Mondin most recently speaking at two CSE events in Toronto and Montreal.
Mondin commented on the milestone, “We are pleased to not only be added to the Index but also to be recognized by the CSE as a leader in Canadian-made automated botanical extraction and processing solutions. This is allowing us to market with the CSE as a featured industry speaker at CSE events across Canada. The CSE is an excellent exchange for entrepreneurs, liquidity and industry participation and we will continue to build our business on this strong foundation.”
FULL DISCLOSURE: Quadron Cannatech is an EQUITY.GURU client.