Reuters: Investors set to lift Shell holdings: “LONDON (Reuters) - Shares in Royal Dutch/Shell have risen in Amsterdam and London, lifted by the prospect that investors will increase their holdings in the stock to reflect its unified structure.” (ShellNews.net)
Thu 28 October, 2004
LONDON (Reuters) - Shares in Royal Dutch/Shell have risen in Amsterdam and London, lifted by the prospect that investors will increase their holdings in the stock to reflect its unified structure.
"The figures are in-line but there's a scramble by those people who are benchmarked against the index to increase their weighting," said a trader on Thursday.
Shell is currently 60-percent owned by the Royal Dutch Petroleum Company RD.AS and 40 percent by the Shell Transport and Trading Company SHEL.L , so the market capitalisation on the FTSE 100 .FTSE index represents only 40 percent of the total Royal Dutch/Shell stock.
By unifying the Dutch and British holding companies, dealers expect the market capitalisation to be 100 percent, triggering a scramble by fund managers for share in the new firm to reflect its new weighting on the index.
Cazenove said in a note to clients: "This implies its FTSE All Share weighting rises from around 3.1 percent to around 7.5 percent."
By 9:28 a.m. shares in Shell SHEL.L were the top blue-chip gainers, up 6 percent at 449 pence on turnover of 120 million shares -- about three times its long-term average total daily turnover.
In Amsterdam Royal Dutch shares were up 3.7 percent at 43.89 euros, as its current 60-percent ownership means a smaller increase in its reweighting.
Shell represents 3.6 percent of the FTSE 100 and 3.1 percent of the FTSE-All Share index .FTAS , dealers said.
If 100 percent of the new company is listed on the London Stock Exchange managers of index tracker funds will have to increase their weightings to around 9 percent for FTSE 100 index tracker funds and as much as 7.7 percent for FTSE All-Share trackers, dealers said.
Dealers said the index reweighting and the clear, more visible board structure outweighed concerns that the company was reviewing 900 million barrels of oil and gas reserves, following the implementation of new auditing processes.
Shell was rocked earlier this year when it revealed that a review of its reserves had shown its proven reserves were overstated by 20 percent.
"People are anticipating much better management control over the business now that there is not going to be a dual structure," said Rita Dhut, a European equities fund manager at Morley Fund Management, which has Shell among its top ten holdings.
FTSE was not immediately able to confirm the expected new weighting, but Shell said earlier that following consultation with FTSE it was "confident that Royal Dutch Shell will be included in the FTSE All-Share and FTSE 100 indices with a weighting reflecting its full market capitalisation."