Royal Mail Leaves The FTSE 100 In Quarterly Shake-up

30 August 2017
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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 review of its constituents, Royal Mail will be relegated to the FTSE 250 along with distressed doorstep lender 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 business's location 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 worth that puts it at 90th location or above, it will sign up with the FTSE 100. If it falls to the 111th or listed below, it will be demoted to the FTSE 250.


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


"Letter volumes have leaked away quicker than the group had anticipated, partially as an outcome direct marketing drying up as service self-confidence slumped after the EU referendum, while prices remains difficult in parcels."


Shares in Provident Financial, which recently issued an earnings caution and parted methods with its president Peter Crook, ended up 1.68% lower at 891.27 p to value the business 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 executed at the close of business on 15 September and will take result 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 and construction 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 marginally greater versus the dollar at $1.2931.