Five Top Canadian Stocks Hit by S&P Changes
Wed Jul 10,10:11 AM ET
TORONTO (Reuters) - Five high-profile Canadian stocks took early losses on Wednesday after Standard & Poor's said it would delete all non-U.S. companies from its benchmark 500 index to focus the index only on U.S. stocks.
About 15 minutes into the session, telecoms equipment supplier Nortel Networks Corp. was down 9.1 percent, gold miners Barrick Gold Corp. and Placer Dome Inc. were down 3.6 percent and 4.3 percent respectively, nickel producer Inco Ltd. declined 7.1 percent, and aluminum maker Alcan Inc. sank 5.2 percent.
Also to be ousted are two Dutch companies. In Europe, shares in giant oil group Royal Dutch and in Unilever NV slid more than 7 percent each on the news as funds that track the U.S. benchmark of big companies' performance rushed to sell the stocks before they leave the index.
S&P said the stocks would be removed from the index after trading ends on July 19 to make the index a better reflection of the large-cap segment of the U.S. equities market.
"Portfolio managers of index funds will be forced to do some adjustments to reflect the changes," said Jeff Cheah, a market strategist at Standard & Poor's MMS, in Toronto.
Analysts said the changes should not have a long-term effect on the stocks, however.
Nortel, whose shares are near their lowest levels in nearly a decade, said in a release on Wednesday that it does not expect the announcement to have any impact on its day-to-day business operations, but acknowledged that there could be a short-term impact on investors.
Meanwhile, Barrick, Canada's largest gold producer, said the S&P changes should be viewed as a "buying opportunity" for the five companies.
Nortel was down 25 Canadian cents at C$2.06. Barrick was down 85 Canadian cents at C$28.64. Alcan was down C$2.40 at C$51.80. Inco was down C$2.20 at C$31.70, and Placer Dome was down 74 Canadian cents at C$16.50.
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