London stock exchange reshuffle reflects Russia exodus
Two Russian miners caught up in the Russia sell-off are to leave the FTSE 100.
The Russia-Ukraine conflict has already had a huge impact on markets. Now, it's even hit the quarterly reshuffle of the FTSE indices. Two FTSE 100 miners caught up in the mass exodus from Russian assets are leaving the index, while there are seven changes to the FTSE 250, including a handful of investment trusts.
We’ve written about steelmaker Evraz (EVR) and gold miner Polymetal (POLY) in the context of the stock market collapse of Russian companies listed in London. It’s now been confirmed by FTSE Russell the two companies, which have fallen in value by 90% and 83% this year respectively, will leave the FTSE 100 and join the FTSE 250.
Replacing them are West African gold producer Endeavour Mining (EDV) and kitchen supplier Howdens (HWDN). Airline easyJet (EZJ) had been in line to rejoin the FTSE 100 after a strong share price performance from December to February, but the Ukraine crisis has checked this progress amid fears over yet more restrictions to international travel.
FTSE 250 changes
Sticking with Russia, FTSE 250 gold miner Petropavlosk (POG) is exiting the mid-cap index after an 87% share price fall in the year to date. Also leaving the FTSE 250 are congestion charge administrator Capita (CPI), Cineworld (CINE), and publisher Reach (RCH). Clipper Logistics (CLG), Tullow Oil (TLW) and Urban Logistics REIT (SHED) are taking the vacant slots on the FTSE 250.
There has been a reshuffle among UK-listed investment trusts too: Baillie Gifford Shin Nippon (BGS), a trust focusing on Japanese smaller companies, is leaving the FTSE 250, but Ruffer Investment Company (RICA) and valued-focused Temple Bar (TMPL) are being promoted to the mid-cap index. Ruffer has a Morningstar Analyst Rating of Bronze and was in the headlines last year for adding Bitcoin to its portfolio before exiting the position.
The changes to the FTSE 100 and FTSE 250 were confirmed after the market closed on Wednesday and will be effective Monday March 21.
Reshuffles explained
Why does the three-monthly reshuffle matter for investors?
Such changes give an insight into which sectors are in and out of favour, and which companies are on the up or struggling in the big league. In the case of the Russian companies, it's worth pointing out that the exit of Evraz and Polymetal are not qualitative decisions by the FTSE Russell Group, which is owned by the London Stock Exchange. It's purely down to changes in market value, which in recent days have been extreme.
Index provider FTSE Russell changes the constituents of its indices every quarter to reflect changes to Britain’s biggest companies. Which companies move in and out of the FTSE 100 is based on their total market capitalisation at the end of the specified trading day. To avoid the same borderline companies dropping out and back in every reshuffle, a company must be in the top 90 by market cap to be promoted. Likewise, to be demoted, the firm has to be below the 110th biggest company by size.