Who's in and Who's out in the Great FTSE Shake-About Stock Market Week
Guerrera, Francesco, The Independent (London, England)
THE GREAT RESHUFFLE is upon us again this week, and the FTSE 100 is braced for its periodical round of changes.
Like a prehistoric ritual, Wednesday's quarterly review of the indices will see some blue chips sacrificed on the altar of market value and a handful of mid-cappers accepted into the market's most revered elite.
The reshuffle is about more than prestige. With institutional investors increasingly reluctant to put money in companies below the FTSE 100, the loss of blue-chip status - and of valuable tracker fund support - often leads to some hefty price falls. Energis is almost certain to be brought into the FTSE 100 inner sanctum. The telecommunications company's shares have had an extraordinary run, soaring nearly 600 per cent in less than a year. The stock's amazing climb has long given Energis a capitalisation well in excess of many FTSE 100 constituents. At around pounds 4.8bn, the group's market value is level with the likes of British Airways and P&O. However, the telecoms supplier was prevented from entering the index by the large stake owned by National Grid, the electricity group. With around 75 per cent of the capital in the hands of just one shareholder, Energis was considered a mere subsidiary of National Grid and thus barred from the FTSE 100. It was freed in January when National Grid cashed in on the stock's performance and reduced its stake to below 50 per cent, netting some pounds 1.1bn for its troubles. As one company in the fancied telecoms sector goes in, one of the battered engineers is set to drop out.This is no ordinary metal- basher, it's none other than Tomkins. The last of the conglomerates, Tomkins has a turnover of pounds 5bn, compared to Energis' pounds 168m, and operations ranging from construction components to food manufacturing and garden equipment. Despite its financial prowess, the shares have been hit by the City's lack of interest in engineering stocks, underperforming the market by some 60 per cent over the past five years. Tomkins' exit from the FTSE 100 will leave BTR Siebe as the only member of the general engineering sector in the index. EMAP, the magazine and radio group, is set to join the FTSE 100. The owner of glossy titles such as FHM and Red and the hip station Kiss FM hit a five-year peak last week at 1,418p. The shares have done well to recover from the dip in December when EMAP splashed out over $1bn ($600m) for Petersen, the US publisher of intriguing titles like Guns 'n Ammo and Hot Rod. EMAP should push out either Williams, the once-sprawling conglomerate now focusing on fire and security, or Safeway, the supermarket chain. Both of them could drop out if South African Breweries gets in. The world's fourth-largest brewer starts full dealings today after a week in the grey market. The stock, floated at 428p, rose to 465p on …
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Publication information: Article title: Who's in and Who's out in the Great FTSE Shake-About Stock Market Week. Contributors: Guerrera, Francesco - Author. Newspaper title: The Independent (London, England). Publication date: March 8, 1999. Page number: 17. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.
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