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 troubled doorstep lending institution Provident .


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, giving 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 sign up with the FTSE 100. If it is up to the 111th position or below, it will be benched to the FTSE 250.


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


"Letter volumes have leaked away much faster than the group had expected, partly as a result direct marketing drying up as company 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 ways with its primary executive Peter Crook, completed 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 health center operator, will go up from the FTSE 250 into the FTSE 100 along with housebuilder Berkeley Group.


All the modifications from the review be implemented 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 business car 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% versus the euro at 1.0843 euros. Sterling was marginally higher versus the dollar at $1.2931.