TORONTO, June 14 (Reuters) - Beaten-down tech and telecom
issues headed the list of stocks to be bounced from Toronto's
S&P/TSX composite index as the index manager makes the first
major readjustment in long-awaited make-over of Canada's
benchmark equity gauge.
Standard and Poor's said on Friday it will remove 23 stocks
and add three to the former TSE 300 index at the close of next
week's trading as the Toronto Stock Exchange spruces itself up
ahead of a planned public offering this year.
The 25-year-old index has been criticized by fund managers
and investors for including too many small or thinly traded
stocks that are difficult for funds to purchase.
Standard & Poors, which operates the index, decided in
January to tighten the criteria for inclusion, toughening
standards of market capitalization, liquidity, and share price
and leaving some former big names out in the cold.
"They are looking at liquidity in addition to a low market
cap, and I think that's good, because what you want is an index
that in fact represents tradable stocks. I think they're moving
in the right direction," said Kate Warne, strategist at Edward
Jones in St. Louis.
Notable among the deletions was a long list of tech and
telecom stocks that have seen share prices wither under a
crippling global slowdown in capital spending.
"You have names like 360 Networks, which was massive when
it was added to the TSE 300 index, and now it's being removed,
so there are some disappointments," said Chris Finora, index
trader at TD-Newcrest.
360networks Inc. <TSX.TO>, which at one point sported a
share price of nearly C$40, was removed after its flimsy share
price of 5.5 Canadian cents and market weighting of less than
0.01 percent fell short of minimum standards.
"It's just reflective of what the capital markets look like
here in Canada," Finora added.
Other telecoms falling out of favor included GTG Group
Telecom Inc. <GTGb.TO>, whose shares have tumbled 98.8 percent
in a little over a year, and Microcell Telecommunications Inc.
<MTIb.TO>.
The rejuggling mirrored recent market trends as tech
companies 724 Solutions Inc. <SVN.TO>, Certicom Corp. <CIC.TO>.
and Zi Corp <ZIC.TO> and Surefire Commerce Inc. <FIR.TO> were
removed, while gold companies Ivanhoe Mining Ltd. <IVN.TO> and
Bema Gold Corp. <BGO.TO> were added.
As TSX tech issues have lost more than 50 percent of their
value in 2002, gold issues have soared as much as 62.8 percent,
because sagging equity markets, a weak U.S. dollar and
geopolitical worries have bolstered gold bullion prices.
Deletions based on a lack of liquidity included shares of
high-profile media companies CHUM Ltd. <CHMb.TO>, Hollinger
Inc. <HLGc.TO> and packaging materials maker Winpak Ltd.
<WPK.TO>.
Share prices of the to-be-removed companies were largely
lower at midday on the TSX, but analysts said market reaction
to the news would likely be muted.
"It was widely anticipated. The street has done their
homework on this and these names have been circulating for
about the last two or three weeks," Finora said.
"The size of the names are pretty small, and indexers
either didn't hold them because they were too small, or won't
sell them because we're talking about a one-basis-point stock,"
he added.
After the current changes take effect, the index will
consist of 277 stocks, since three stocks were dropped earlier
in the year.
TrizecHahn Corp. <TZH.TO> was dropped in May after the
company said it will change into an investment trust, while
Trilon Financial Corp. <TFCa.TO>, and Clarica Life Insurance
Co.<CLI.TO> were taken out after merging with other companies.
More of the TSX's smaller stocks will be deleted from the
list over the next six months, likely leaving the index with
between 225 and 250 of the country's bigger and more liquid
issues.
Rounding out the additions to the index is Shoppers Drug
Mart Corp. <SC.TO>, which went public late last year.
Listed below are additions and deletions from the S&P/TSX
Composite Index.
ADDITIONS:
Bema Gold Corp. <BGO.TO>
Ivanhoe Mining Ltd. <IVN.TO>
Shoppers Drug Mart Corp. <SC.TO>
DELETIONS:
360networks Inc. <TSX.TO>
724 Solutions Inc. <SVN.TO>
Acktion Corp. <ACK.TO>
BPO Properties Ltd. <BPP.TO>
Certicom Corp. <CIC.TO>
CHUM Ltd. <CHM.TO> class B
E-L Financial Corp. <ELF.TO>
Fahnestock-Viner HoldingsInc. <FHVa.TO>
FPI Ltd. <FPL.TO>
Glyko Biomedical Ltd. <GBL.TO>
GT Group Telecom Inc. <GTGb.TO>
Hollinger Inc. <HLGc.TO> Class C
Inflazyme Pharmaceuticals. <IZP.TO>
Ivanhoe Energy Inc. <IE.TO>
Lions Gate Entertainment Corp. <LGF.TO>
Microcell Telecommunications Inc. <MTIb.TO>
Micrologix Biotech Inc. <MBI.TO>
Proprietary Industries Inc. <PPI.TO>
Southward Energy Ltd. <SWN.TO>
Surefire Commerce Inc. <FIR.TO>
Turbo Genset Inc. <TGN.TO>
Winpak Ltd. <WPK.TO>
Zi Corp. <ZIC.TO>.
($1=$1.55 Canadian)
((Cameron French, Toronto Reuters Bureau (416) 941-8199,
fax:(416) 869-3436, cameron.french@reuters.com))
REUTERS
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