What to expect from the FTSE reshuffle

What to expect from the FTSE reshuffle

Next week will see the final reshuffle of the FTSE for 2018, where all eyes will be on which big names leave or join the blue-chip index.

FTSE 100

For the FTSE 100, the most likely to drop off the list is the Royal Mail (LON: RMG). The postal group has struggled this past quarter after a shock profit warning in October and drop in market value.

Expected profit dropped from £694 million to £500-550 million.

Whilst the share price has slightly recovered, it will need to increase another 12% in the next week in order to avoid being dropped from the FTSE 100.

Connor Campbell from Spreadex told UK Investor Magazine: “It’s been quite the year for Royal Mail. Having struck its highest levels since the start of 2014 back in May, it is now looking like it is going to crash out of the FTSE 100, the British institution’s out-dated letters division seeing its struggles only increase in a post-GDPR world.”

“Just from a common-sense perspective, it makes sense; regardless of the online-shopping led growth in parcel volumes, the letters side of things is only going to exponentially shrink in the next decade or so.”

Dubbed to replace the Royal Mail is insurance company Hiscox (LON: HSX), whose share price has more than doubled in the past five years.

 FTSE 250

Funding Circle (LON: FCIF) and Aston Martin (LON: AML) are likely to join the FTSE 250 index following a disappointing debut onto the stock market. 

Despite Aston Martin shares falling below IPO price, the group remains positive for the future.

“We’ve taken 105 years to get to an IPO [initial public offering]. I don’t think we’ll worry about what the shares are doing initially. We’ll always look over the longer term,” said the group’s chief executive.

Groups that face getting bumped from the FTSE 250 include Thomas Cook, On the Beach, Premier Oil, Spire Healthcare, Civitas Social Housing and Keller Group.

Thomas Cook (LON: TCG) issued a second profit warning in two months this week, sending shares down 30%. 

“Our final result is expected to be around £30 million lower than previously guided, due to a number of legacy and non-recurring charges to underlying EBIT. Within this, profit in our tour operating business fell £88 million as the sustained heatwave restricted our ability to achieve the planned margins in the last quarter,” said the group’s chief executive, Peter Fankhauser.