Five new names joined the ASX 200 Index this week, including one of Australia's most traded stocks and an international airport operator.

Auckland International Airport (ASX: AIA), insurer AUB Group (ASX: AUB), Ramelius Resources (ASX: RMS), Westgold Resources (ASX: WGX) and Zip Co (ASX: Z1P) were all added to list of Australia's largest 200 companies by market capitalisation following S&P Dow Jones' official quarterly rebalance.

The activity will affect the holdings of several of Australia's largest ETFs, which rely on the index including the SPDR S&P/ASX 200 ETF (ASX: STW) and the iShares Core S&P/ASX 200 ETF (ASX: IOZ). Rebalancing can also have an impact on individual stock prices when a company is added or removed from the index.

S&P/ASX 200 Index | Additions (effective 21 September)

S&P 200 Rebalance September 2020

Source: S&P Dow Jones Indices

Zip's inclusion is a milestone for Australia's buy now, pay later (BNPL) sector. Two of the sectors largest players – Zip and Afterpay (ASX: APT) – now feature in the index, and several others are jockeying for a position.

The global pandemic has done little to slow the boom in BNPL services. In fact, the market capitalisation of operators has soared as locked-down consumers were forced to adapt to online retailers to fit out their home offices and purchase home entertainment. Both Zip and Afterpay have secured deals with major deals with e-commerce retailers and platforms including eBay, Amazon, Bunnings, Kmart and Kogan.

The average Australian worker spent $450 setting up their home office, according to a report from freelance marketplace Fiverr.

Younger Australians are also reportedly ditching interest-incurring credit cards in favour of BNPL services, swelling Afterpay and Zip Pay's customer base to more than 5 million.
This, plus announcements of overseas expansions, has propelled share prices across the sector.

Zip shares reportedly accounted for a 9.9 per cent of total trades made on the CommSec platform in the last week of August.

Afterpay missed out on an official spot in the S&P/ASX 20 Index despite its market cap approaching $25 billion last month.

Wide-moat airport operator Auckland International Airport also gained entry to the index on Monday. Its inclusion comes despite the bleak outlook for global travel. International passengers remain the primary profit driver for the operator, given higher airline fees and greater retail spending, Morningstar regional director of equity research Adam Fleck says.

"This traffic has been near zero for several months, leading to revenue falling nearly 49 per cent in the second half of fiscal 2020 versus the prior corresponding, and adjusted EBITDA margins slipping to 51 per cent from 74 per cent."

At $6.43, AIA is trading within a range Morningstar analysts consider fairly valued.

Media landscape ravaged

A devastating six months for Australian media companies was reflected in the removal of two groups from the index – Ooh!Media (ASX: OML) and Southern Cross Media (ASX: SXL). OML revealed an 81 per cent slump in 2020 first-half underlying EBITDA last month as audiences and advertisers abandoned outdoors during the height of the pandemic.

Shares in no-moat SXL as significantly undervalued relative to Morningstar's $0.38 fair value estimate, trading at around 15 cents.

Coal miner New Hope Corporation (ASX: NHC) was also removed, alongside salary-packaging and novated-leasing company McMillan Shakespeare (ASX: MMS) and lithium chemicals producer Orocobre (ASX: ORE). All have seen declines in their share prices year to date.

Morningstar analysts ceased coverage on MMS in April citing several near-term uncertainties.

"The largest near-term risk is an economic downturn which will see higher unemployment and a recession, reducing demand for salary packaging and novated leases for new case," Morningstar analysts said in a note ceasing coverage.

S&P/ASX 200 Index | Removals (effective 21 September)

S&P 200 Rebalance September 2020

Source: S&P Dow Jones Indices

Outside the top 200, retail giant Myer (ASX: MYR) has been removed from the S&P/ASX 300. The 120-year-old department store's share price dipped below 20 cents in July and is down over 50 per cent this year, crippled by nationwide lockdowns and tough economic conditions.

Scentre Group (ASX: SCG) and Suncorp Group (ASX: SUN) were both removed from the S&P/ASX 20 Index to make way for Coles (ASX: COL) and Fortescue Metals (ASX: FMG).