Electrocomponents set for FTSE 100 as a founding member is seen ousted

(Alliance News) - Johnson Matthey PLC's surprise decision to get out of battery materials may have spelt an end to the speciality chemical firm's 19-year stint in the FTSE 100, with Electrocomponents PLC seen set for a coveted spot amongst London blue-chips.

"Johnson Matthey was a founder member of the FTSE 100 all the way back in 1984 and this could be the chemicals and precious metals specialist's second demotion to the FTSE 250, following that of December 1984," said AJ Bell investment director Russ Mould.

Darktrace PLC and ITV PLC also face being booted out the index, in favour of Dechra Pharmaceuticals PLC and Howden Joinery Group PLC.

New London entrant Petershill Partners PLC could jump into the FTSE 250, at the expense of online electricals retailer AO World PLC which is continuing to suffer after issuing a profit warning in October.

"Its rapid growth seems to have been part of the problem, given that it hasn't had as much time to build up deep relationships with suppliers, so when the supply crunch hit for electrical goods, it was lower down on the list of priorities," said Susannah Streeter, an analyst at Hargreaves Lansdown.

Given its warning that the Christmas trading period will be tough, "AO World may find it hard to climb back up the ladder into FTSE 250 territory for some time", Streeter added.

The quarterly FTSE index review is based on changes to 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 London Main Market companies that are the 325th biggest or larger move up to the FTSE 250, and those FTSE 250 constituents that are 376th or smaller move down to the FTSE SmallCap index.

The index changes will be announced after the market close on Wednesday, based on closing prices on Tuesday. The changes come into effect from the start of trading on Monday, December 20.

Re-indexing can lead to increased trading activity as, for example, fund managers with FTSE 100 tracker portfolios need to offload stocks that no longer sit in the index and buy the stocks that move in.

By Lucy Heming; lucyheming@alliancenews.com

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