The travel company Thomas Cook is to drop out of the FTSE 250 after a sharp fall in the market value of the company.
On the flip side, Aston Martin is poised to enter the index two months after the luxury carmaker made its debut on the London Stock Exchange.
Index provider FTSE Russell will confirm the changes to its indices on Wednesday, after a quarterly review based on companies’ market value at the close of trading on Tuesday.
Over the past three months Thomas Cook shares have plunged more than 70% to close at 23p on Wednesday. It will be joined in demotion from the FTSE 250, which tracks listed mid-cap firms, by fellow travel company On the Beach and the motoring services and insurance firm AA, according to indicative data from the close of trading on Monday.
In the FTSE 100 index, Royal Mail is expected to be the only firm to drop out. Royal Mail was first demoted from the large-cap index in August 2017, after listing in 2013 following privatisation. It rejoined in March, but issued a profit warning in October after a worse-than- expected performance.
Royal Mail will be replaced by the insurance firm Hiscox, which will join the FTSE 100 for the first time.
Dropping out of an index has a marginal impact on demand for shares because some tracker funds are required to hold shares based on index membership. It also has symbolic importance.
In the FTSE 250, Aston Martin Lagonda is expected to be one of the most prominent new additions. Its stock was floated in October for the first time in a listing which initially valued the carmaker at £4.33bn. However, Aston Martin’s shares have since fallen by a quarter.
Other companies expected to be promoted to the FTSE 250 are peer-to-peer lending platform Funding Circle, the retirement housebuilder McCarthy & Stone and the investment trusts Smithson and Woodford Patient Capital.
Restaurant Group, the owner of brands such as Frankie & Benny’s and Garfunkel’s, will also join the FTSE 250, days after its shareholders backed the controversial purchase of the Wagamama restaurant chain in a £559m deal.
The struggling outsourcing and construction company Kier Group also faces relegation from the mid-cap index. Short sellers have targeted the firm after the collapse of its rival Carillion at the start of the year. Investors have declared bets equivalent to 13% of market value that the value of Kier shares will fall.
The index constituents are decided by their market value at the close of business on the Tuesday before the first Friday of the review month.
