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Royal Mail Likely to Face Demotion

Thu, 23rd May 2019

All eyes were on Royal Mail on Friday, as investors tried to predict whether the company would be demoted in the coming FTSE 100 reshuffle. The markets will be reshuffled based on the respective market caps of each company as of the close of trading on Tuesday.

Shares in royal mail were trading down by two percent on Friday, giving the company a current market cap of approximately £3.2 billion. This means that the company’s valuation is 119th in the charts. The cut off for remaining in the FTSE 100 is 110th.

Friday saw the FTSE 100 as a whole perform poorly, down another 50 points, to dip below the 7,000 mark once again. The UK’s leading index ended the week at 6,991.33. UK stocks ended the month down by around 0.4%, with banks, food retailers, miners, industrial companies and tobacco companies weighing down the market. Meanwhile, telecoms and healthcare companies offered a certain degree of support.

One strong performer in the FTSE 250 was Hiscox. Shares in the company climbed back to £16.60, giving the insurer a market cap of £4.8 billion. This puts it in 90th position, high enough to be promoted to the FTSE 100 next week. Hiscox is in the catastrophe insurance business, and it has seen earnings squeezed by the run of typhones, hurricanes and forest fires that have occurred around the world this year.

Other companies likely to be promoted include Acacia Mining, and McCarthy and Stone. Meanwhile, AA, Civitas and Keller Group are among those likely to see demotion.

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