The MSCI is redefining the concept of a free float to one that excludes strategic investments - those held by controlling shareholders and governments. Foreign ownership limits are also taken into account. The other part of this change in definition is to increase market coverage from 60 per cent to 80 per cent. Thus a few new companies on the Australian market are likely to move into the index. Clearly, any announcement reflecting these changes will pressure the News and Telstra share prices.
News is a more volatile stock and is more likely to suffer from any change in sentiment.
Those already strong performers, like Westfield Holdings and Macquarie Bank, are probably going to be the biggest beneficiaries of a larger weighting in the index. This material is subject to copyright and any unauthorised use, copying or mirroring is prohibited.