Institutional shareholders have today beeen betting big money on which shares are likely to be affec...
Institutional shareholders have today beeen betting big money on which shares are likely to be affected by tomorrow's reshuffle of the FTSE 100, 200 and other indices.
Most interest will, of course, be on those companies threatened with FTSE 100 relegation.
FTSE won't comment on who it expects to go down, but as of last night's closing prices Cable&Wireless, Brambles and Corus all looked certain to become defined as mid-cap players in the FTSE 250 index.
Liberty, British Airways and Whitbread all looked like being moved up to blue-chip status.
But the way the FTSE reshuffle is calculated means other firms could also be sent up or down.
If a company remains in the top 111 ranked by market capitalisation value then it remains in the FTSE 100, but if a FTSE 250 company makes the top 90 then it is moved up.
Several firms in the FTSE 100 are today valued at about £1.5bn, and a number in the FTSE 250 valued at between £1.5bn to £1.6bn.
That means existing index members Schroders non-voting, Xstrata, Alliance Unichem, Canary Wharf and Tomkins are battling it out with top mid-cap stocks Rank Group, Tate&Lyle, Provident Financial, Kelda Group and Foreign&Colonial Investment Trust for the bottom places in the FTSE 100.
FTSE will announce its decision by tomorrow afternoon or evening.
The importance of the reshuffle is that it unleashes a wave of buying and selling by tracker funds, which have no choice but to buy stocks move up to the FTSE 100 and sell stocks being sent to the FTSE 250.
Stocks moved up will see their share prices rise as trackers buy in, so active fund managers who buy beforehand at lower prices can make substantial profits.
Data by LinkedIn
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