Royal Mail Leaves The FTSE 100 In Quarterly Shake-up

30 August 2017
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The FTSE 100 closed greater on Wednesday, however Royal Mail is set to leave the ranks of the blue chip index.


The blue chip index finished up 27.83 points at 7,365.26.


In FTSE Russell's quarterly review of its constituents, Royal Mail will be relegated to the FTSE 250 alongside troubled doorstep lender Provident Financial.


The postal service has actually been a FTSE 100 business since quickly after being privatised in 2013.


On Wednesday, Royal Mail's shares closed at 390.5 p, offering the postal service a market capitalisation of ₤ 4bn.


A business'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 review.


If a group has a value that puts it at 90th location or above, it will sign up with the FTSE 100. If it falls to the 111th position or below, it will be benched to the FTSE 250.


Nicholas Hyett, equity expert at Hargreaves Lansdown, stated: "Royal Mail has lost its battle to keep a place in the FTSE 100. We're not sure that's something you can lay at primary executive Moya Green's door though, as the group continues to deal with hard market conditions.


"Letter volumes have actually permeated away faster than the group had actually anticipated, partly as an outcome direct marketing drying up as company self-confidence after the EU referendum, while prices stays hard in parcels."


Shares in Provident Financial, which recently provided an earnings caution 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 descend to the FTSE 250.


In contrast, NMC Health, the Abu Dhabi-based medical facility operator, will go up from the FTSE 250 into the FTSE 100 together with housebuilder Berkeley Group.


All the changes from the review be executed 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 commercial lorry hire group, miner Petra Diamonds and construction company Carillion will fall out of the FTSE 250. Those going 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 partially higher versus the dollar at $1.2931.