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 alongside struggling doorstep lender Provident Financial.
The postal service has actually been a FTSE 100 business given that 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 place in the FTSE 100 or FTSE 250 is figured out by its market capitalisation at the close of trading on the day of the review.
If a group has a value that puts it at 90th place or above, it will sign up with the FTSE 100. If it is up to the 111th position or listed below, it will be to the FTSE 250.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Royal Mail has actually lost its battle to preserve 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 leaked away quicker than the group had anticipated, partly as a result direct marketing drying up as business confidence slumped after the EU referendum, while pricing stays tough in parcels."
Shares in Provident Financial, which just recently released a profit warning and parted ways with its chief executive Peter Crook, completed 1.68% lower at 891.27 p to value the business at ₤ 3.1 bn. It will likewise come down to the FTSE 250.
In contrast, NMC Health, the Abu Dhabi-based health center operator, will go up from the FTSE 250 into the FTSE 100 in addition to housebuilder Berkeley Group.
All the modifications from the evaluation be implemented at the close of service on 15 September and will take effect from the start of trading on 18 September.
The FTSE 250 closed 88.67 points up at 19,616.56.
Northgate, the commercial vehicle hire group, miner Petra Diamonds and building company Carillion will fall out of the FTSE 250. Those moving up to the FTSE 250 include online betting group 888 Holdings.
On the currency markets, the pound edged up by 0.48% versus the euro at 1.0843 euros. Sterling was marginally higher against the dollar at $1.2931.