Last checked at LONDON (Alliance News) - Tullow Oil is set to be the second oil-related stock in successive quarters to drop out of the FTSE 100, following Petrofac Ltd's demotion at the last FTSE index review, while drug maker Hikma Pharmaceuticals is set to take its place.
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 Wednesday, March 4, based on closing prices on March 3. The changes come into effect from the start of trading on Monday, March 23.
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:
Hikma Pharmaceuticals: Market capitalisation GBP4.75 billion. The company has seen its share price rise 33% since the last index review in December to the high it made at the end of February. It saw particularly strong rises in its share price during early to mid January, when it was upgraded to Buy from Hold by Jefferies, and said it will now prepare to launch its colchicine 0.6 milligram capsules, after Takeda Pharmaceuticals USA Inc failed in its bid to block the distribution of the capsules. Current share price 2,392.00p.
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FTSE 100 Deletes:
Tullow Oil: Market capitalisation GBP3.32 billion. The oil and gas explorer had a volatile quarter, mostly tracking changes in the oil price, and saw its shares drop sharply in the wake of its 2014 results when it said it swung to a pretax loss after booking significant impairment charges which, combined with falling production and revenue, caused the company to suspend its final dividend for the year. On Monday the company sunk even further after it warned that it could be hit by a racheting up of tensions in a maritime border dispute between Ivory Coast and Ghana. Current share price 364.80p.
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FTSE 250 Adds
AA: Market capitalisation GBP2.11 billion. The roadside assistance and insurance company's shares have risen around 4% in the past three months, and over 53% from its June IPO price of 250.00 pence. Current share price 380.75p.
Virgin Money Holdings: Market capitalisation GBP1.42 billion. The UK-based bank and financial services company whose biggest shareholder is Virgin Group has seen its share price rise by around 12% since its London IPO in November. During the quarter Virgin Money said it has signed a seven-year deal with Monitise under which the payments company will help in developing elements of Virgin Money. Current share price 321.75p.
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 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.
Imagination Technologies Group. Market capitalisation GBP682.7 million. Current Price 251.75p.
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FTSE 250 Deletes:
Afren: Market capitalisation GBP103.8 million. The oil and gas explorer's shares have dropped 78% in the past three months, suffering from the decline in the oil price. On January 27, Afren shares lost more than half their value, as its funding problems deepened, after warning that it will require equity funding beyond its market capitalisation if its debt structure remained as it was. In February, Afren's proposed takeover by SEPLAT Petroleum Development Co collapsed. Current share price 9.37951p
GAME Digital: Market capitalisation GBP443.5 million. The video game retailer's shares lost 30% of their value in mid January when the company said that due to lower than expected margins on its hardware sales, it expects its full year earnings before interest, tax, depreciation and amortisation to be broadly in line with its previous year's figure of GBP51.3 million. Current share price 260.90p.
Oxford Instruments: Market capitalisation GBP461.2 million. The technology tools and systems provider's shares dropped 28% after it issued a profit warning on January 22 as its orders were hit by Russian sanctions, it reported weaker trading in its Industrial Analysis business, and the recovery it had forecast for the Japanese market failed to materialise. The company's shares did not substantially recover from the loss. Current share price 805.00p
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By Neil Thakrar and Daniel Ruiz; neilthakrar@alliancenews.com; @NeilThakrar1; danielruiz@alliancenews.com
Copyright 2015 Alliance News Limited. All Rights Reserved.
13 Feb 2015 17:07