The latest quarterly shuffling of the deck in the FTSE 100 list of blue-chip companies and the FTSE 250 index of mid-cap stocks sees a significant amount of change.
To qualify for inclusion in the FTSE 100 index a stock needs to meet certain liquidity requirements and have a sufficiently large market capitalisation to rank in the top 100 companies.
Stocks which fail to meet these criteria are demoted to the FTSE 250 and can be replaced by one of the top mid-cap stocks.
At the last re-shuffle in March, gambling group GVC (GVC) and oil services firm John Wood (WG.) were dropped from the FTSE 100 and were replaced by fast-food delivery firm Just Eat (JE.) – which had lost its place in the index just three months earlier – and life assurer Phoenix Group (PHNX).
TWO OUT, TWO IN
Being demoted from the FTSE 100 this time round, after six years in the top flight, is low-cost airline EasyJet (EZJ). Following a bumpy start to the year, with passenger numbers and ticket prices down, shares have fallen to a five-year low of 850p giving the company a market value of just £3.4bn and putting it in 113th position, meaning automatic relegation.
Also relegated is Hikma Pharmaceuticals (HIK), which only joined the FTSE 100 in December but which has struggled to grow sales this year, leaving its shares well below their November 2018 peak of £20.
There had been fears that high street retailer Marks & Spencer (MKS) might also be dropped for the first time since the index was created in 1984, but thanks to the rights issue it has managed to keep its market value above the cut-off point. Eyes are likely to be on M&S come the next review though.
Stocks being promoted to the blue-chip index are footwear retailer JD Sports (JD.) which has a market value of just over £6bn, and engineering software firm Aveva (AVV) which also has a market value of just over £6bn.
NEW LOOK TO THE MID-CAPS
At the other end of the table, stocks leaving the bottom of the FTSE 250 for the Small-Cap index are online gaming firm 888 (888), investment company Civitas Social Housing (CSH), drug-maker Indivior (INDV), retirement-planning firm Just Group (JUST), infrastructure group Kier (KIE), specialist insurer Saga (SAGA) and logistics group Stobart (STOB).
Joining the mid-Cap index are media firm 4imprint (FOUR), publisher Future (FUTR), software firm Kainos (KNOS), brewer Martson’s (MARS), payment firms Network International (NETW) – which only floated in April this year – and PayPoint (PAY), and hotels group PPHE (PPH).
Leaving aside Martson’s and PPHE, the new joiners have a distinct ‘new economy’ feel to them while many of the leavers look somewhat tired.