Monday (September 18th) sees the latest shake up of the FTSE 100 and FTSE 250 indices.  

NMC Health and Berkeley Group Holdings will join the FTSE 100, while Provident Financial and Royal Mail are demoted to the FTSE 250.

Promoted to the FTSE 250 Index are Alfa Financial Software Holdings, Sequoia Economic Infrastructure Income Fund, and 888 Holdings. Relegated from the FTSE 250 Index are Carillion, Northgate and Petra Diamonds.

With the Brexit vote well over a year behind us, this is how the UK’s large and mid-cap indices changed.

FTSE 100

OUT:


Provident Financial

The embattled subprime lender has woes aplenty. Its share price tanked by nearly 70% in a single day after a quadruple-whammy profits warning sent investors reeling. A botched operational restructuring has seen earnings from core consumer credit division plunge, while the FCA is investigating Vanquis Bank. Trouble at the Provvy but a turnaround is already being worked on.

Royal Mail

Royal Mail faces structural problems, namely falling letter volumes and parcel business being leached to rivals and independent operators who are nimbler and more efficient.

It’s also facing trouble with unions. This is a big battle about the way the company operates and one Royal Mail will need to win to satisfy investors. Costs could climb to as much as £1.3bn a year from the current level of £400m if unions get their way. Pension reform also risks industrial action that will disrupt the business, which could hit confidence and revenues.

Hikma Pharmaceuticals

Profits warnings amid trouble in its generics drug business has resulted in Hikma’s stock sliding more than 50% since July 2016.Of particular concern, it’s been struggling to achieve regulatory approval in the US for its generic version of Advair, GSK’s asthma drug.

Intu Properties

For Intu, see Segro. For Segro, see Intu. Intu has come under pressure as investors fret that shopping centres are not where growth is. The structural changes in shopping habits has left this stock with nowhere to go.

Capita

The struggling outsourcer reported a 33% drop in profits as Brexit hit contract wins. CEO Andy Parker got the boot and a turnaround is now in progress. The stock is now in the FTSE 250 but is currently front of the queue to re-join the blue chip index.

Dixons Carphone

Slowing mobile phone sales seems to be behind why the City has gone cold on Dixons. A whopper of a profits warning in August sent the stock reeling. Dixons is now guiding headline profits before tax in the region of £360m-£440m. If we take the mid-point of £400m, it would represent a 20% drop in profits from last year’s £501m. Only a very small portion of that would be down to the disposal of the Spanish business. The biggest hit seems to be caused by EU roaming legislation, which will result in negative one-off adjustments relating to its mobile network debtor of around £10m-£40m, versus a positive contribution to profits of £71m last year. 

In the core retail area, the UK mobile phone market is proving a tough nut in 2017. Consumers are holding onto phones for longer. Brexit matters here – the weak pound exchange rate has made devices more expensive and consumers are less willing to replace old handsets so quickly.

Will the arrival of the iPhone 8, 8 Plus and X devices herald a new refresh cycle for Dixons? The devices will test consumer price elasticity but with DC trading at around 172p and a PE ratio of less than 7, investors could come back.

Travis Perkins

Exposed to the UK construction market, Travis Perkins has been on the back foot since Brexit. But while some, notably housebuilders, have recovered ground the building materials merchant remains off colour. It can blame plumbers for this. Although sales are up, profits before nasties fell 5% to £175m thanks to a 32% fall in adjusted operating profits at its plumbing division. The new management team has begun a comprehensive strategic review.

IN:


NMC Health

The Abu Dhabi based private hospital operator has a market cap of more than £5bn. Its share price has jumped by a quarter since knockout results showed a 34% leap in revenues.

G4S

The outsourcer’s shares have doubled in the last year to hit a ten-year high. After a series of scandals that grabbed headlines, the company seems to be enjoying a turnaround with half-year profits reported in August up 7.6%.

Segro

While Intu struggles with online shopping replacing bricks-and-mortar, Segro is enjoying nothing short of a boom in demand. A shortage of warehouse space drove up profits in the six months to June by 23%.

Scottish Mortgage Investment Trust

Who says active fund management is dying? Wise investments in Chinese and US tech companies over the last decade has seen its net asset value increase 150% in five years, while its market cap now exceeds £5bn.

Rentokil

Pest control is on the up and Rentokil is cashing in. Dividends have been growing every year since 2011 and the share price is up 400% in that time.

ConvaTec Group

If you think the market for colostomy bags and catheters will only grow, ConvaTec could be one to benefit. Demographic shifts would seem to support this thesis, although there is always pressure to cut costs. After raising £1.5bn in an IPO that valued the firm at £4.4bn, shares are up 10% but have fallen 20% since June. Half year profits reported in August were a little short of forecast.

Smurfit Kappa Group

Profits at the box and container manufacturer rose 9% last year as the firm reported record earnings. Demand for packaging is rising as the explosion in online shopping means parcel volumes are soaring.

Movers:

Berkeley Group Holdings – exited September 2016, re-joined September 2017

Polymetal International - joined Sep 16, exited Dec 16

 

FTSE 250

 

In

 

(Demoted from FTSE 100)

Provident Financial

Royal Mail

Hikma Pharmaceuticals

Intu Properties

Capita

Dixons Carphone

Travis Perkins

(Promoted)

Alfa Financial Software Holdings

Sequoia Economic Infrastructure Income Fund

888 Holdings

Coats Group

FDM Group Holdings

Melrose Industries

Pershing Square Holdings

Sirius Minerals

TBC Bank Group

Sanne Group

Syncona

Ferrexpo

NewRiver REIT

Nostrum Oil & Gas

GVC Holdings

Hunting

Out

 

Carillion

Petra Diamonds

Allied Minds

AO World

BH Macro (GBP)

Debenhams

Keller

SVG Capital

Brown (N.) Group

CMC Markets

International Personal Finance

Countrywide

DFS Furniture

Laird

NCC Group

Pendragon

Circassia Pharmaceuticals

Mover:

Northgate (entered in March 2017, exits September 2017)

 

 

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