Royal Mail Leaves The FTSE 100 In Quarterly Shake-up

30 August 2017
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The FTSE 100 closed greater 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 alongside troubled doorstep lender Provident Financial.


The postal service has actually been a FTSE 100 company given that soon after being privatised in 2013.


On Wednesday, shares closed at 390.5 p, providing 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 worth that puts it at 90th place or above, it will join the FTSE 100. If it falls to the 111th position or below, it will be demoted to the FTSE 250.


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


"Letter volumes have actually seeped away quicker than the group had actually anticipated, partially as an outcome direct marketing drying up as organization confidence dropped after the EU referendum, while pricing remains difficult in parcels."


Shares in Provident Financial, which recently issued an earnings warning and parted ways with its president 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.


On the other hand, NMC Health, the Abu Dhabi-based medical facility operator, will move 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 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% against the euro at 1.0843 euros. Sterling was partially higher versus the dollar at $1.2931.