Tui AG (LON:TUI), Carnival PLC (LON:CCL), Kingfisher plc (LON:KGF) and WM Morrison Supermarkets PLC (LON:MRW) could be poised to drop out of the FTSE 100 when a quarterly reshuffle is confirmed next week.
NMC Health PLC (LON:NMC), which has lost around two thirds of its value since December, is certain to be demoted from the blue chip index when FTSE Russell connects its first quarterly review of 2020.
With its shares suspended after tumultuous few months, NMC’s market cap currently stands at just under £2bn.
TUI and Carnival have seen their shares sink sharply since the middle of this month as worries about the effects of the coronavirus outbreak have hit the travel sector particularly hard.
TUI’s market cap currently sits at just over £3.6bn and Carnival’s at around £3.7bn, smaller than a dozen of the stocks at the top end of the FTSE 250.
Index relegation rules
Under FTSE Russell’s rules for the index, companies get the chop from the FTSE 100 automatically and are shoved into the FTSE 250 if they fall to 111th or below on the list of largest companies by market cap.
The changes will be announced next Wednesday on the basis of closing share prices on Tuesday.
At mid-afternoon on Friday, Carnival was the 111th largest company in London, TUI was 114th, meaning there would be three automatically demoted down to the mid-cap index.
Kingfisher, 109th with a market value of under £3.9bn, Morrison, at 106th with a value of just over £4bn, and Meggitt (LON:MGGT), 104th at £4.1bn, are all in distinct danger of the drop, with Pearson (LON:PSON), DS Smith (LON:SMDS), Centrica (LON:CNA), Sainsbury’s (LON:SBRY) and easyJet (LON:EZJ) all flirting with relegation.
Top of the FTSE 250 and primed for promotion is asset manager Intermediate Capital Group (LON:ICP), followed by silver miner Fresnillo Plc (LON:FRES), housebuilder Bellway (LON:BWY), bookmaker GVC Holdings (LON:GVC) and water company Pennon Group (LON:PNN), all valued at above £4.5bn.
Not far behind, Derwent London (LON:DLN), Direct Line (LON:DLG), Unite Group (LON:UTG) and ConvaTec Group (LON:CTEC) will be hoping for some momentum in their shares to push them up into the coveted FTSE 100.
Russ Mould, investment director at AJ Bell, said, with markets looking volatile, last-minute changes ahead of the reshuffle deadline on 3 March could also put several others in danger of the drop, including recent entrant Just Eat Takeaway.com (LON:JET) and Hikma Pharmaceutical (LON:HIK).
Pearson should avoid the chop, said Mould, but demotion for Pearson would cap a "dreadful period" for the publisher under the guidance of chief executive John Fallon as the company was a founder member of the FTSE 100 and has been ever-present since the launch of the index in January 1984.
He noted that Fresnillo looked poised for a rapid return to the FTSE 100, after its demotion last December.
Looking at possible promotions, he added: “It will only take a small percentage change in these firms’ respective market capitalisations to confirm demotion or achieve promotion and investors will be watching these changes closely.
“With so many people’s pensions now invested in tracker, or exchange-traded, funds which are designed to mirror and deliver the performance of the FTSE 100 (minus their running costs), private individuals will end up with exposure to the newly-promoted names, whether they are aware of it or not.”