Take a look
The official FTSE reshuffle announcement is made later today, we won’t know for sure till then but based on latest prices available it looks like Ocado and GVC have gained promotion to the FTSE 100 with G4S and Mediclinic dropping out.
M&S looks like it has survived the drop – just.
Mothercare, Carpetright and Moss Bros all look set to exit the FTSE All Share.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown: ‘Marks and Spencer looks like it’s avoided relegation from the FTSE 100 by the skin of its teeth. Reshuffles happen every three months though, so this is a stay of execution rather than a full pardon. M&S boss Steve Rowe is promising transformation, and has been candid in admitting it’s a lengthy road ahead. However the pace of disruptive technological change means making M&S special again is a moving target, and management are taking aim from a long way out.
Carpetright, Mothercare and Moss Bros all face ejection from the FTSE All Share, so shares in these companies will be jettisoned from the large number of passive funds which track this index. These companies are struggling to make ends meet, so losing their place in the index is probably a peripheral concern, though it still has negative implications for the liquidity in these stocks. The triple relegation is an indication of just how tough things are on the high street.
In a sign of the old economy giving way to the new, Ocado now looks set to gain promotion to the FTSE 100 in this reshuffle. A spate of licensing agreements has trumped up the share price in recent months, and shows that Ocado is well-versed in the art of the deal.
Likewise gambling group GVC looks like it has nabbed a spot in the winner’s enclosure. The potential opening up of the US sports betting market has significantly cushioned the blow of the UK government’s clampdown on Fixed Odds Betting Terminals, often dubbed “the crack cocaine of gambling”.
FTSE 100 promotions
Ocado looks set to enter the FTSE 100 for the first time after a sensational year which has seen the share price treble. The company has managed to sign deals in France, Sweden, Canada and the US to license out its market-leading online delivery technology. Ocado has for some time been a popular stock for hedge funds to bet against, but now just 5% of the company’s shares are in the hands of the short sellers compared to 13.5% in January. There’s still the question of turning potential into profits, but the cookie jar lid has now definitely been prised open.
Gambling group GVC also looks to have secured automatic promotion to the FTSE 100, despite the UK government clamping down heavily on Fixed Odds Betting Terminals. While this door has closed, another has opened in the form of the US sports betting market, which looks set to be unlocked following a landmark ruling from the US supreme court. GVC may not be a familiar name, but it’s a serial dealmaker, acquiring Ladbrokes Coral earlier this year, the online bookie bwin in 2016, and Sportingbet in 2013.
FTSE 100 Relegations
G4S looks set to be ejected from the blue chip index, not for the first time in its history. The global security company is no stranger to controversy, with scandals including overcharging the MoJ for electronic tagging and botching security arrangements at the London Olympics. The share price has actually been climbing recently after posting a positive set of results in March, but that doesn’t look like it’s going to be enough to save its blushes in this reshuffle.
Mediclinic has come to the rescue of M&S after a large share price decline following a poor set of results last week, which saw the international healthcare company fall to the back of the FTSE 100 pack.