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FTSE 100 and FTSE 250 reshuffle: who are the winners and losers?

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Instead of a gentle reshuffling of cards in the FTSE review, the conflict in Ukraine has thrown the pack up in the air, with Russian miners plummeting down in value. Companies in the travel sector which just last week looked like contenders for inclusion in the blue chip index, like easyJet have seen their hopes blown off course.

The safe haven flight into gold has benefited Endeavour Mining which looks set to join the FTSE 100, while the building trade stalwart Howdens Joinery is expected to also join the top flight as investors seek out companies which show more durability in the face of uncertainty on financial markets.’

Evraz and Polymetal set to leave the FTSE 100

After Russia invaded Ukraine and then stringent sanctions were imposed on Moscow, the fortunes of the Russia focused miners Evraz and Polymetal International have reversed dramatically. Shares in Evraz are down by 55% over the last five days, which translates into heavy losses for Roman Abramovich who owns a 30% stake in the company. Gold miner Polymetal has experienced an even more brutal swing downwards, falling by 75% since conflict broke out. It may mine gold, but its main customers are Russian banks who sell it on to international gold markets, and with the corporate world increasingly freezing out Russia’s financial sector, investors are fleeing. Shares in Polymetal International have fallen 22% and Evraz by 14% Monday alone as sellers flood onto the market but buyers are few and far between.

Endeavour Mining set to join the FTSE 100

Gold has become sought after once more as a safe haven as the catastrophe unfolds in Ukraine and with little end in sight to the conflict investors clearly expect the precious metal will continue to be in demand. This sentiment has helped Endeavour Mining, which owns and operates mines in West Africa, five thousand kilometres away from the conflict. It reported strong results near the end of 2021, with underlying profits surging and the group set to generate $1 billion in operating cash flow for the full year. The group is projected to surpass production guidance for the full year and is expanding projects across the region including in Mali and Senegal.


Howdens Joinery – set to enter the FTSE 250

A stalwart of the building industry, Howdens Joinery looks set to nail entry into the FTSE 100 despite a dip in the share price today. There had been concerns that given the housing market is expected to cool off as the year progresses, it could knock Howden’s strong pandemic performance. But it’s clearly seen as a resilient performer in such uncertain times, especially if fewer people use lockdowns savings to travel and do up homes instead. As the race for space continues and with strong demand still rocketing through the housing market, homeowners still seem to be snapping up new kitchens like hot cakes. It banged out some record results for 2021 and is expanding the number of depots to 950 in the UK and increasing its presence in France and the Republic of Ireland.”

EasyJet – blown off course on its flight into the FTSE 100

EasyJet has been blown off course from its route back into the FTSE 100. It had been making great progress on its flight path to recovery but war breaking out on the doorstep of Europe has unnerved the market. Shares fell another 5.5% Monday , and are down 15% since Russia invaded Ukraine. Airlines have flown into yet more turbulence as fuel costs mount and worries grow about the impact of the Ukraine crisis on traveller sentiment. The closure of airspace around the conflict zone and the ban on flights from Russia over many skies has added to operational difficulties for companies with regular routes around the region. Longer term, it’s higher fuel costs that are likely to weigh on the sector once the immediate headache of re-routing flights is eased. The fear is that prices will head up much higher if Russia retaliates to sanctions and weaponises oil, sharply limiting supplies to Europe.

Cineworld – contender to leave the FTSE 250

‘The long story of struggle continues for Cineworld with little sign that there will be a rapid recovery in its fortunes, and so its share price is bumping along in the cheap seats. Although the rush of Bond and Spiderman bookings came as a new uplifting scene for Cineworld, given the sorry story that played out during the pandemic, the brief euphoria didn’t last. Spies and superheroes alone won’t be the secret weapon back to health given that Cineworld is now reeling from the punch delivered by the Supreme Court of Justice in Ontario which ruled in favour of the Cineplex chain of cinemas in its legal battle against the company. It’s also unlikely that ticket sales will ever fully recover to the heady days of the past, given the huge shake-up of the movie industry. The footprint of the large cinema chains is set to contract further and there is likely to be a further refocus on smaller more luxury venues, providing the high-end cinema experience that people are unable to get at home.”

Clipper Logistics – set to enter the FTSE 250

Clipper Logistics has positioned itself right at the heart of British supply chain, capitalizing on the accelerated shift to e-commerce during the pandemic. The e-commerce specialist boasts big retail player partners like Marks and Spencer and ASOS, who recognised the benefits of outsourcing warehousing and supply chain operations. With a flurry of deal activity in the logistics sector, there is little surprise Clipper may have found a suitor, and news that US rival GXO Logistics is circling with a bid has sent the share price soaring. Although no firm offer has yet been made, the group said it was minded to accept the cash and share offer, so a stint in the FTSE 250 is likely to be short lived.

Capita – contender to leave the FTSE 250

Outsourcer Capita has been trying to streamline its operations and cut debt by offloading parts of its portfolio but that’s not stemmed the loss of confidence. Its shares have fallen by another 20% since the start of the year and are down 43% over the last six months. After years of declining revenues due to a loss of contracts, the restructuring drive has yet to reap rewards, disappointing investors with a significant turnaround not yet in sight.’

Other potential movers from the FTSE 250

Baillie Gifford Shin Nippon is a publicly traded investment trust which invests in Japanese smaller companies. Its share price has fallen by 25% since the start of the year and is a contender to fall out of the FTSE 250. Taking a place in the FTSE 250 could be Temple Bar Investment Trust which aims to provide growth in income and capital to achieve a long-term total return greater than the benchmark FTSE All-Share Index, through investment primarily in UK securities. Ruffer Investment Company is also a contender for FTSE 250 promotion. It invests in equities or equity related securities or bonds which are issued by corporate issuers or government organisations.

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Hargreaves Lansdown IG Interactive Brokers Interactive Investor Charles Stanley
IG Interactive Brokers Charles Stanley

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