Royal Mail Leaves The FTSE 100 In Quarterly Shake-up

30 August 2017
ShareSave


The FTSE 100 closed higher on Wednesday, but 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 together with distressed doorstep lending institution Provident Financial.


The postal service has actually been a FTSE 100 business because 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 determined 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 place or above, it will sign up with the FTSE 100. If it falls to the 111th position or listed below, it will be demoted to the FTSE 250.


Nicholas Hyett, equity expert at Hargreaves Lansdown, said: "Royal Mail has lost its struggle to preserve a place in the FTSE 100. We're unsure that's something you can lay at chief executive Moya Green's door though, as the group continues to face tough market conditions.


"Letter volumes have leaked away quicker than the group had anticipated, partly as an marketing drying up as organization self-confidence slumped after the EU referendum, while pricing stays hard in parcels."


Shares in Provident Financial, which recently released a profit caution and parted ways with its president Peter Crook, ended up 1.68% lower at 891.27 p to value the company at ₤ 3.1 bn. It will also descend to the FTSE 250.


On the other hand, NMC Health, the Abu Dhabi-based hospital operator, will go up from the FTSE 250 into the FTSE 100 together with housebuilder Berkeley Group.


All the changes from the evaluation be carried out at the close of company 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 industrial lorry hire group, miner Petra Diamonds and building firm Carillion will fall out of the FTSE 250. Those moving up to the FTSE 250 consist of 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 partially higher versus the dollar at $1.2931.