Five Canadian companies dumped from S&P 500 index
Shares of five Canadian companies dumped from the S&P 500 index slipped in morning trading on U.S. markets on Wednesday.
Standard & Poor's dropped Nortel Networks, Placer Dome, Alcan, Inco and Barrick from the 500 list, along with Royal Dutch Petroleum and Unilever. The seven companies are being replaced with UPS, Goldman Sachs, Prudential Financial, eBay, Prinicipal Financial, Electronic Arts and SunGard Data Systems.
The changes will take effect after the close of trading on July 19.
The move was made to make the S&P 500 comply with Standard & Poor's current selection rules, which stipulate that all members of the index must be U.S. companies.
The seven outgoing companies entered the index, some as far back as sixty years ago, before that requirement was in place and before Standard & Poor's had established a series of global indices.
"This change makes the S&P 500 a better reflection of the large cap segment of the U.S. equities market and enhances the role of the S&P 500 as the key U.S. component of our global S&P index family," David Blitzer, the chairman of S&P's index committee, said in a release.
"We also believe that removing the non-U.S. companies will make the S&P 500 a more useful benchmark for tracking large-cap U.S. equity market performance," Blitzer said.
The share prices of the five Canadian firms dropped from the 500 index were all trading lower in morning trading on Wall Street.
Nortel was off 19 cents at $1.36, while Barrick dropped $1.02 to $18.52. Placer Dome shed 74 cents, reaching $10.71. Inco fell $2.14 to $20.31, while Alcan lost $2.31 to $33.65.
In reaction to Standard & Poor's announcement, Nortel Networks said the move will not affect its day-to-day operations.
"However, we are sensitive to the short-term impact this change may have on our investors," company president and CEO Frank Dunn said in a release.
Alcan president and CEO Travis Engen said he was disappointed with the realignment.
"Alcan has been a member of the S&P 500 Index and its predecessors for over 65 years," Engen said. "With nearly half of our shareholders and over a third of our revenues based in the U.S., we are a fully-established element of the U.S. equities market."