FRANKFURT, Sept 2 (Reuters) - Chipmaker Infineon is the most likely candidate to join Germany's bluechip DAX index on Thursday when the Frankfurt stock exchange conducts its periodic review.
The revisions are especially important for index-tracking funds, whose portfolios mirror the composition of an index and have been attracting increasing interest as investors move away from the traditional equities market.
Infineon is tipped to replace Hannover Re, which will have spent six months in the index of Germany's 30 largest listed companies. Infineon left the DAX index on March 23, the day Hannover Re joined.
The possible exclusion of Volkswagen ordinary shares , a constituent of the blue-chip index since 1987, was another talking point ahead of this year's review.
'Its about whether VW ordinary shares will be replaced by its preferred shares,' said Christian Stocker, stock strategist at UniCredit.
VW's vote-carrying ordinaries face removal from the index after options held by the Qatar Investment Authority and Credit Suisse, worth 17 percent of the voting rights, expired on Aug. 31.
'Volkswagen looks like it will be removed by at least the end of the year,' said index analyst Anke Platzek from LBBW.
ICF index expert Klaus Stabel said: 'As long as all of the options have not been exercised, the free float has not changed.'
The exchange's Working Committee for Equity Indices will use market data as per Aug. 31 in considering its picks.
The committee's guidelines stipulate DAX-listed companies need to be among the 35 largest companies in Germany by market capitalization and be ranked at least 45th in stock turnover during the previous 20 trading days.
Hannover Re is likely to be removed as the 37th largest German company by market capitalization, according to Reuters data.
FINANCIAL CRISIS LEAVES MARK
Two companies hit hard by the financial crisis will be removed from the German mid-cap index: Arcandor and Hypo Real Estate.
'There is really no decision process necessary here, both companies cannot be included,' Platzek said.
Retailer Arcandor entered formal insolvency proceedings on Tuesday, paving the way for a breakup of the group and making it ineligible for membership on the MDAX or any other index.
Hypo Real Estate, now largely nationalized and with a free float of just above 10 percent, is the 128th largest company by market capitalization and its average turnover over the last 12 months ranks it below the top 160.
Along with Hannover Re, whose spot in the MDAX appears secure, real estate specialist BayWa, lender Aareal Bank and pharma company Biotest are seen as possible replacements.
Among German technology stocks, Singulus and Solon could be in danger of dropping out.
Singulus is ranked number 152 in market capitalization and Solon number 149. The TECDAX index should roughly extend to the 110 largest German companies.
Integrated circuit specialist Dialog Semiconductor , robotics expert Manz Automation and biotech company Evotec -- all listed on the Frankfurt small-cap index -- are the main contenders to join the tech index.
(Additional reporting by Stefan Schaaf; editing by John Stonestreet) (tyler.sitte@thomsonreuters.com; +49 69 7565 1207; Reuters Messaging: tyler.sitte.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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