Alliance Trust poised to exit FTSE 100 as ITV eyes promotion

Published on Wednesday 2 March 2011 15:59

ALLIANCE Trust could lose its place in the FTSE 100 index this week, while Aberdeen-based Wood Group along with a resurgent broadcaster ITV are tipped to be promoted.

Miner African Barrick Gold is also likely to fall into the mid-tier FTSE 250 in the index's regular quarterly shake-up on Wednesday.

The figures determining which firms are in and out won't be set until the close of the London Stock Exchange on Tuesday.

But recent performance suggests Alliance Trust, under chief executive Katherine Garrett-Cox, will end its two-year stint as one of the UK's top listed firms.

Sam Hart, equity analyst with Charles Stanley, said: "With the big investment trusts you often find they go into the FTSE 100 when the market is depressed because they tend to hold up a bit better than the more volatile shares.

"When the market recovers they drop out."

Alliance Trust joined the index in February 2008, which then chief executive Alan Harden described as "morale-boosting".

The firm's market capitalisation was then 2.3 billion.

Fears remain that a slip from the FTSE 100 will depress Alliance Trust shares, which will widen the discount between the value of its shares and the value of its assets.

This is a sticking point with activist investor Laxey Partners, which is campaigning to force the board of Alliance Trust to buy back its own shares to close the discount.

But Hart said the activist was unlikely to get the rules changed at the firm's next annual meeting.

Shares in Wood Group rose sharply last month after the energy services heavyweight agreed to sell its well support division to General Electric for $2.8 billion.

ITV's shares reached a 52-week high on Thursday after the firm revealed in its annual results how it had benefited from a recovery in the television advertising market.

Companies outside the FTSE 100 that grow to rank among the 90 largest by market capitalisation are automatically promoted, while the FTSE 100 firms with the lowest value or that fall to 111th spot or below drop into the FTSE Midcap 250 index.

According to Charles Stanley last week, African Barrick Gold was at 113 and Alliance Trust at 114, while Wood Group was in the safety zone at 84 and ITV at 87.

Index compiler FTSE will formally announce the changes to the FTSE UK index series after the market closes on Wednesday, based on the closing prices on Tuesday.

The index changes will become effective on 21 March.