Dimension Data to exit FTSE 100

By Iain Scott for Dimension Data South Africa
Johannesburg, 03 Aug 2001

The Dimension Data share dropped to R13.70 in mid-morning trade on the JSE today after news that the group`s share is to be removed from the elite FTSE 100 index, before recovering to R14.55 by early afternoon.

The share lost some ground yesterday, closing 50c down at R14.50 in anticipation of last night`s announcement that it had lost its place in the index.

With effect from 7 August, the Dimension Data share will be removed from the FTSE 100, FTSE CAP 100 and the FTSE Eurotop 300, and will be added to the FTSE 250 and FTSE EuroMid indices.

The new entrant to the FTSE 100 is Brambles Industries (UK). Brambles is an Australian company whose market capitalisation was boosted significantly by a recent A$19 billion merger with support services units of British company GKN.

Dimension Data`s market capitalisation has more than halved in the past month since issuing a warning that its operating margins were expected to fall.

By yesterday`s close the share had lost just under 53% since opening at R30.80 at the start of July.

All eyes are now on the stock to see what happens when it moves from the FTSE 100 next week.

The significance of falling from the index is that large tracker funds which buy into FTSE 100 companies are compelled to sell their shares when the stock falls out, and to buy into the replacement companies.

Dealers anticipate that the share will probably fall further once that happens, although analysts say the market is already largely in the process of factoring that in.

By noon today the share had regained some ground, climbing back to R14.30. By early afternoon, it was trading 5c up on yesterday`s close.