No local IT companies are likely to make it into the new SA Titans 30 index compiled by US company Dow Jones.
The new index, which was announced this week, is part of the Dow Jones Global series on large companies. Stockbrokers are hoping that it will place SA shares firmly on the international investor map and attract funds, particularly from the US. The index will become operational on 16 September and will be distributed on a real-time basis.
While the final composition of the index has not been announced, asset managers say that no SA IT companies including such heavyweights as Comparex and Datatec will make the cut, because their market capitalization of R1.4 billion and R2.4 billion respectively is too low. The index is expected to include companies with market capitalisations of between R63 billion and R6 billion.
Datatec, which has a market capitalization of about R4.8 billion, would not make it even if its market capitalisation was higher because it had its primary listing in London.
According to a Dow Jones statement, the South Africa Titans 30 Index is based on the top 30 largest and most liquid securities in the South African market. The index features a market capitalisation of R455 billion and is free float market capitalisation weighted, with weights capped at 10% to prevent dominance by any individual company.
Dow Jones has indicated that the companies with the highest weighting will be Sasol, Standard Bank, FirstRand, Remgro, Gold Fields and Impala Platinum.
Piet Viljoen, head of asset management company Regarding: Capital Management says: "This is not a bad thing for the IT companies as those companies included in the index have probably already achieved their gains."
Viljoen says he regards IT companies as being relatively cheap at the moment and so they would have more to gain than those already in the index.
"Right now I would rather be a buyer of Didata and Datatec as they seem to be relatively cheap compared to the rest of the market," he says.
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