Published 02 Dec 2014 17:07
LONDON (Alliance News) – Housebuilders Barratt Developments PLC and Taylor Wimpey PLC are set to join peer Persimmon PLC in the FTSE 100 in Christmas week, after the recovery in the UK housing market drove up their valuations, but the recent drop in oil prices means Petrofac PLC is set to drop out of the blue-chip index.
The quarterly FTSE index review is based on changing market capitalisation, and sees those FTSE 250-listed stocks that are the 90th biggest or larger in the main market move up, and FTSE 100 companies that are 111th biggest or smaller move down, keeping the indices balanced.
Similarly, the main market companies that are the 325th biggest or larger move up to the FTSE 250, and those that are 376th or smaller move down to the FTSE SmallCap index.
The index changes will be issued after market close on December 3, based on closing prices on December 2. The changes come into effect from the start of trading on December 22.
Re-indexing can lead to increased trading activity as, for example, fund managers with FTSE 100 tracker portfolios will need to offload stocks that no longer sit in the index and may want to buy the stocks that move in.
Here’s a run down of the likely moves ahead of the official announcement:
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FTSE 100 Adds:
Barratt Developments: Market capitalisation GBP4.47 billion. The housebuilder is set to re-enter the bluechip index after being relegated at the last review. The company’s share price rose significantly in middle third of October and was further supported in November when it said it was on track to deliver a strong year of growth with market conditions remaining robust for the group across the country and its sales rate increasing in the period between the start of July and November 9. Barratt currently trades close to its March price, when it was initially added to the FTSE 100. Current share price 451.00p.
Taylor Wimpey: Market capitalisation GBP4.24 billion. The housebuilder has seen its shares rise fairly sharply since mid October. The company also shot up in mid-November after it upgraded its operating margin growth forecast for 2014, expecting its operating margin to grow 400 basis points. Taylor Wimpey has recently been trading at its highest price since April 2008. It dropped out of the blue-chip index in March of that year as the housing market was hit hard by the financial crisis. Current share price 130.30p.
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FTSE 100 Deletes:
Petrofac: Market capitalisation GBP2.76 billion. The oil services company saw its share price decline sharply in the run up to the index review as it warned that it expects its 2014 net profit to be towards the bottom of its previous guidance and to fall in 2015, after being hit by recent falls in the oil price as well as some contract issues. The company’s shares declined by more than a quarter after the profit warning, and fell even further during the most recent decline in oil prices. Current share price 812.50p.
IMI: Market capitalisation GBP3.16 billion. The specialist engineering company has seen its shares steadily decline in the weeks following the previous index review at the beginning of September, and has traded broadly flat since mid-October. Analysts as Liberum had cut the company to Hold from Buy in mid-November, citing weakening organic growth and flat margins in the third quarter, which it expects to continue through 2015. Current share price 1,164.00p.
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FTSE 250 Adds:
Spirit Pub Company: Market capitalisation GBP683.7 million. The pub owner has seen its shares rise considerably over the quarter, driven by deal hopes. In early November, Greene King said it has reached an agreement with the board of Spirit Pub to acquire the company. The deal values Spirit shares at 115 pence per share and values the entire company at around GBP773.6 million. Current share price 103.50p.
Jimmy Choo: Market capitalisation GBP681.1 million. The luxury shoe maker is currently trading higher than its IPO price of 140.00p on October 22, which was at the bottom of the indicative range for the deal. Current share price 174.75p.
While none of the companies listed below have a market capitalisation large enough to automatically put them in line for addition into the FTSE 250, the next three biggest companies in the FTSE Smallcap will replace the newly relegated names. Currently, this means that the following companies will move into the FTSE 250.
Allied Minds: Market capitalisation GBP650.5million. Current share price 305.00p.
CLS Holdings: Market capitalisation GBP641.7 million. Current share price 1,495.00p.
Greggs: Market capitalisation GBP632.2 million. Current share price 625.00p.
GCP Infrastructure Investments: Market capitalisation GBP607.62 million. Current share price 118.25p.
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FTSE 250 Deletes:
Hochschild Mining: Market Capitalisation GBP324.9 million. The precious metals miner has suffered due to falling commodity prices. The company also fell when it reported a drop in third-quarter production in late October, and fell again in November when it targeted further cost reductions across its operations, which will result in output from the Arcata and Pallancata mines in Peru falling. Current share price 88.50p.
EnQuest: Market capitalisation GBP347.1 million. The oil and gas firm’s shares have slid as the price of oil fell significantly over the quarter. Oil prices came under increased pressure at the end of November when the Organization of the Petroleum Exporting Countries decided not to cut its production ceiling of 30 million barrels of oil per day. Current share price 43.24p.
Ferrexpo: Market capitalisation GBP400.3 million. The miner has suffered over the quarter as a result of the low iron ore prices. The company has been subject to numerous broker downgrades with Investec cutting it to Sell from Buy, and UBS adding it to its Least Preferred List of European Metals & Mining. The Swiss bank has since removed Ferrexpo from the list but the miner’s share price has failed to see a recovery. Current share price 68.00p.
Spirent Communications: Market capitalisation GBP409.3 million. The telecommunications equipment company fell heavily in early October when it warned that its revenue was being hit by softened trading conditions in the third quarter, and it expected revenue and operating profit in the fourth quarter to be lower than it had hoped. The company’s shares fell further due to a string of broker downgrades on the back of the profit warning. Current share price 66.90p.
Foxtons Group: Market capitalisation GBP438.5 million. The London-focused estate agency is another company which issued a profit warning in the quarter. The company said in late October that its third-quarter performance had been hit by a sharp slowdown in London property sales volumes over the period, and it was downgrading its earnings forecast for the year because it also expects that market volumes will remain constrained for the whole second half. Current share price 155.40p.
Fenner: Market capitalisation GBP465.4 million.The reinforced polymer technology company’s share price suffered a gradual slowdown in the tail end of September, and dropped heavily in mid-November after it posted a big drop in full-year pretax profit, as it was hit by currency movements and weaker conditions in key markets. Current share price 239.90p.
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By Neil Thakrar; neilthakrar@alliancenews.com
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