6 months ago • 2 mins
What’s going on here?
The FTSE 100 confirmed its quarterly reshuffle this week, with some not-so-subtle changes.
What does this mean?
The FTSE 100 is home to the UK’s heftiest public companies, serving as a barometer for both Britain's corporate landscape and economy. And because companies can go from high-flyers to belly-floppers overnight, the FTSE 100 gets a regular spruce-up, promoting stocks that have bulked up and saying cheerio to slackers.
This time around it looked like Ocado, the online grocery delivery firm, was poised for an exit. But its partnership with Marks & Spencer – which posted impressive results last week – seems to have given Ocado the legs it needed to narrowly avoid a departure. Instead, British Land was taken out, falling foul of a slump in the commercial property space that it calls home. Taking the firm’s place was the engineering firm Imperial Metal Industries, staging a comeback after a nigh-on-ten-year hiatus.
Why should I care?
For markets: Lost and fund.
Billions of dollars are invested in FTSE 100-tracking funds, which have to buy into any stock that enters the index. And some investors try to predict those new entries, buying their shares early and hoping for a profit when the funds follow suit. But it’s not all fun and financial windfalls: companies that leave the FTSE 100 could see their share prices fall even further too, as funds that track the British index suddenly ditch their shares en masse.
Zooming out: London calling.
UK stock markets have been finding it hard to draw in new companies and hang onto existing ones. But WE Soda, the world's top producer of natural soda ash, has opted to list in London over New York – a rare victory for the British capital. With an estimated valuation of $8 billion, WE Soda could break London’s dry spell of significant listings and might even enter the FTSE 100 in due course.
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