FTSE 100 reshuffle: The five stocks at risk of falling out of London’s blue-chip list
Supermarket chain Morrisons, B&Q owner Kingfisher and travel agent Tui are among the companies at risk as the FTSE braces for a reshuffle this week.
The next quarterly shake-up is due to be announced on Wednesday, based on closing prices tomorrow.
NMC Health, which is facing a probe into its finances by the City watchdog and had its shares suspended last week, is all but certain to drop out of the blue-chip index.
Helal Miah, investment research analyst at The Share Centre, said he “could not recall such a clear-cut relegation as NMC Health”.
“To survive the dropout, NMC would need to rally by 250 per cent in the next couple of weeks which is highly unlikely given the current mess at the Middle Eastern healthcare provider,” he added.
Morrisons and Kingfisher, which have valuations of £4.2bn and £3.8bn respectively, have also been tipped as potential victims of the reshuffle.
It would mark the latest blow to the UK high street after Marks & Spencer was ousted from the FTSE 100 in September, and would leave only four retailers in the benchmark index.
German travel agent Tui, which has been hit by the coronavirus outbreak, could also be ejected from the index.
Richard Hunter, head of markets at Interactive Investors, said the virus “will certainly mean relegation unless there is a sharp improvement in fortunes overnight”.
Analysts also cast doubts over FTSE 100 stalwart Pearson, which has faced a tough transition to digital products amid a decline in demand for educational textbooks.
The company has doubled down on its online products and sold off non-core assets, including the Financial Times and its stake in Penguin Random House.
“None of this has done much to halt the gradual decline in the share price and the 2019 results published in February accompanied by a profit warning may be its last act as a member of the FTSE 100,” Miah said.
Among the candidates for promotion are miner Fresnillo, which has a market capitalisation of £4.5bn, and asset manager Intermediate Capital.
Newcastle-based housebuilder Bellway, gambling firm GVC and utilities firm Pennon Group are also thought to be in the running.
Hunter said the next 24 hours of trading could be crucial in determining the winners and losers of the reshuffle, with recent market volatility throwing numerous firms into the mix.
“This could mean that the March reshuffle results in the most competitive race for a seat at the top table in some considerable time,” he said.