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 finished 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 lending institution Provident Financial.
The postal service has 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 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 join the FTSE 100. If it falls 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 lost its struggle to keep a location in the FTSE 100. We're not exactly sure that's something you can lay at president Moya Green's door though, as the group continues to face tough market conditions.
"Letter volumes have seeped away much faster than the group had expected, partially as an outcome direct marketing drying up as service confidence slumped after the EU referendum, while prices remains tough in parcels."
Shares in Provident Financial, which just recently released an earnings caution and parted methods with its president Peter Crook, finished 1.68% lower at 891.27 p to value the company at ₤ 3.1 bn. It will likewise descend to the FTSE 250.
In contrast, NMC Health, the Abu Dhabi-based hospital operator, will move up from the FTSE 250 into the FTSE 100 together with housebuilder Berkeley Group.
All the changes from the review be implemented at the close of service on 15 September and will take impact from the start of trading on 18 September.
The FTSE 250 closed 88.67 points up at 19,616.56.
Northgate, the business lorry hire group, miner Petra Diamonds and building and construction company Carillion will fall out of the FTSE 250. Those going 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 marginally greater against the dollar at $1.2931.