Russian gold miner Polymetal could take its place in the blue chip index
Thursday 29 Aug 2019 Author: Ian Conway

Next week we will know which stocks are joining the FTSE 100 index of leading UK companies on 23 September and which have been relegated to the FTSE 250 in the latest reshuffle of the main UK indices. For one firm in particular, the stakes have never been greater.

This time round the leading candidates to join the FTSE 100 are Russian precious metal miner Polymetal (POLY), which was 76th in terms of market value as at 27 August, and Hikma Pharmaceuticals (HIK) which was in 85th position.

There is also a good chance that defence contractor Meggitt (MGGT) could be promoted given it was 90th in terms of market value.

Companies fall out of the FTSE 100 if they are no longer one of the UK’s 110 largest listed groups, or promoted from the FTSE 250 if they score within the top 90 when the markets close on a certain date every quarter.

The stocks at most risk of falling out of the FTSE 100 this time are utility group Centrica (CNA), insurer Direct Line (DLG) and retailer Marks & Spencer (MKS).

Shares in Centrica, which was in 105th position in terms of market value at the time of writing, are trading at 20-year lows after it slashed its dividend by 60% as profits plummeted due to the Government’s price cap on energy firms.

Chief executive Iain Conn fell on his sword and the company announced its intentions to exit oil and gas interests, but the shares have yet to recover.

Direct Line, in 102nd position in terms of market value, saw its shares drop to almost a five-year low last week as profits fell on a combination of higher costs and a change in the calculation of personal injury payments.

For Marks & Spencer, currently in 110th position, demotion from the FTSE 100 would be the final insult after 35 years in the blue-chip index.

Despite a strong reputation as a food retailer, failure to connect with its customers in clothing and to develop a coherent online offering to counter falling footfall have seen its shares crash to 10-year lows this month.

In a recent YouGov consumer survey, even supermarket clothing brands George (Asda), Tu (Sainsbury (SBRY)) and F&F (Tesco (TSCO)) scored more highly than M&S’s upmarket Per Una range.

The next FTSE reshuffle will be based on 3 September’s closing prices and changes will be announced after the market close on 4 September.

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