Royal Mail Leaves The FTSE 100 In Quarterly Shake-up
30 August 2017
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The FTSE 100 closed higher on Wednesday, however Royal Mail is set to leave the ranks of the blue chip index.
The blue chip index ended up 27.83 points at 7,365.26.
In FTSE Russell's quarterly evaluation of its constituents, Royal Mail will be relegated to the FTSE 250 along with struggling doorstep lending institution Provident Financial.
The postal service has actually been a FTSE 100 since shortly after being privatised in 2013.
On Wednesday, Royal Mail's shares closed at 390.5 p, providing the postal service a market capitalisation of ₤ 4bn.
A company's location in the FTSE 100 or FTSE 250 is identified by its market capitalisation at the close of trading on the day of the evaluation.
If a group has a value that puts it at 90th location or above, it will sign up with the FTSE 100. If it is up to the 111th position or below, it will be demoted to the FTSE 250.
Nicholas Hyett, equity expert at Hargreaves Lansdown, said: "Royal Mail has actually lost its battle to maintain a location in the FTSE 100. We're uncertain that's something you can lay at president Moya Green's door though, as the group continues to deal with difficult market conditions.
"Letter volumes have actually permeated away much faster than the group had actually anticipated, partially as an outcome direct marketing drying up as company confidence plunged after the EU referendum, while pricing stays hard in parcels."
Shares in Provident Financial, which just recently provided a profit warning and parted ways with its primary executive Peter Crook, finished 1.68% lower at 891.27 p to value the company at ₤ 3.1 bn. It will also come down to the FTSE 250.
On the other hand, NMC Health, the Abu Dhabi-based health center operator, will go up from the FTSE 250 into the FTSE 100 together with housebuilder Berkeley Group.
All the modifications from the review be carried out at the close of business on 15 September and will work from the start of trading on 18 September.
The FTSE 250 closed 88.67 points up at 19,616.56.
Northgate, the business car hire group, miner Petra Diamonds and building and construction firm Carillion will fall out of the FTSE 250. Those moving up to the FTSE 250 consist of online wagering group 888 Holdings.
On the currency markets, the pound edged up by 0.48% versus the euro at 1.0843 euros. Sterling was partially greater versus the dollar at $1.2931.