The latest quarterly re-shuffle of the FTSE 100 threw up few surprises but there were several notable promotions and demotions in the mid-cap FTSE 250.

Joining the top flight next quarter as expected are pharmaceutical firm Hikma (HIK), electrical and electronic kit-maker Meggitt (MGGT) and Russian precious metal miner Polymetal (POLY).

Making way are under-pressure insurer Direct Line (DLG), out-of-touch retailer Marks & Spencer (MKS) and sagging software firm Micro Focus (MCRO), also in line with market expectations.

NEW FACES

Among the other stocks joining the mid-cap index we note that four are recent initial public offerings (IPOs): Airtel Africa (AAF), Finablr (FIN), Trainline (TRN) and Watches of Switzerland (WOSG).

As flagged in this week’s edition of Shares magazine, there have been just 25 UK IPOs so far this year compared with 87 last year and 106 the year before that.

Of those, Trainline and Watches of Switzerland have been among the better performers while Finablr has traded sideways since listing.

Airtel Africa has been one of the worst performers but thanks to its size it still qualifies for inclusion in the mid-cap benchmark.

FINANCIAL FLOPS

Among those dropping out of the FTSE 250 are three ‘challenger’ financial firms which also floated not that long ago: Amigo Holdings (AMGO), Funding Circle (FCH) and Metro Bank (MTRO).

All three have lowered their earnings expectations for this year due to a weaker economic outlook, which has dampened demand for credit.

In addition, Amigo raised its forecast for impairments, or bad loans, while Metro Bank had to increase the capital it puts aside for contingencies after it mis-classified some of its loans earlier in the year.

Year-to-date Amigo shares re down 74%, Funding Circle shares are down 68% and Metro Bank shares are down 83%.

SUBS BENCH

Interestingly, of the six stocks on the FTSE 100 reserve list, which is used in the event of a corporate action such as a merger or acquisition, two are already bid targets.

Aerospace equipment company Cobham (COB) has been targeted by US private equity firm Advent while Merlin Entertainments (MERL) is the target of a bid from a consortium including the Danish Kirkbi group which is behind the Lego empire.

The other names on the list are Direct Line, F&C Investment Trust (FCIT), Homeserve (HSV) and Intermediate Capital Group (ICP).

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Issue Date: 05 Sep 2019