Here’s why the Kogan.com (ASX:KGN) share price jumped over 7% higher today

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The market may be dropping lower on Monday, but that hasn’t stopped the Kogan.com Ltd (ASX: KGN) share price from charging higher.

At one stage today, the ecommerce company’s shares were up as much as 7.5% to $19.40.

The Kogan share price has since given back some of these gains but is still up over 4% to $18.81 at the time of writing.

Why is the Kogan share price charging higher?

There appears to have been a couple of catalysts for Kogan’s positive share price performance on Monday.

The first is concerns over the outbreak of COVID-19 in New South Wales, which has led to tighter restrictions and concerns that further lockdowns could occur.

This could be a big boost to online retailers such as Kogan, especially at such an important time of the year for the retail industry.

For the same reason, the Temple & Webster Group Ltd (ASX: TPW) share price is pushing higher this afternoon.

What else is driving the Kogan share price higher?

Another catalyst could be the company’s addition to the benchmark S&P/ASX 200 Index (ASX: XJO) this morning following the December rebalance. Kogan joined the illustrious index along with plumbing parts company Reece Ltd (ASX: REH) at the commencement of trade today.

They have replaced Avita Therapeutics Inc (ASX: AVH), Cooper Energy Ltd (ASX: COE), and Western Areas Ltd (ASX: WSA).

You may have noticed that the index is welcoming two shares and dumping three. That’s because the ASX 200 index was home to 201 shares in the last quarter following the Deterra Royalties Ltd (ASX: DRR) demerger from Iluka Resources Limited (ASX: ILU).

With Kogan now part of the ASX 200, index-tracking funds will have to buy its shares in order to reflect the change. In addition to this, some fund managers have mandates that only allow them to buy shares on certain indices.

This could mean that some fund managers are adding the company to their portfolios today and are bidding its shares higher.

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Returns as of 6th October 2020

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited, Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Avita Medical Limited, Kogan.com ltd, and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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