Hikma to swap with G4S in latest FTSE index reshuffle

A reshuffle of London's main share indices is expected to see Hikma Pharmaceuticals and Intu Properties kicked out of the FTSE 100, with outsourcer G4S and industrial real estate investor Segro taking their places.

UPDATE: Results of the FTSE reshuffle confirmed

Royal Mail is flirting with relegation from the blue chip index as part of the FTSE Russell quarterly index reshuffle changes and could be replaced by Middle East hospital operator NMC Health, housebuilder Berkeley Group or online takeaway food marketplace Just Eat if their shares gain much before the deadline at the closing bell on Wednesday.

Meanwhile, Debenhams may drop out of the FTSE 250 index along possibly alongside SVG Capital, Allied Minds and Keller Group.

The changes, which are made based on market capitalisations from Wednesday's closing prices, will be confirmed after market close on Thursday and will be put into practice from start of trading on Monday 19 June.

Small cap companies hopeful of promotion into the midcap index include North Americas-focused investment trust Pershing Square, Yorkshire Polyhalite miner Sirius Minerals, industrial thread and consumer textile crafts business Coats Group, IT-focused professional services FDM Group and Georgia's TBC Bank.

Index reshuffle process

Companies drop down from the FTSE 100 automatically to the FTSE 250 if they fall to 111th or below on the list of largest companies by market cap.

“A market capitalisation of around £5 billion is now the minimum required to gain entry to the FTSE 100 and the index promotions and relegations highlight the importance of consistent growth and the ongoing battle between clicks and bricks within the retail industry," said Russ Mould, investment director at AJ Bell.

Hikma looks likely to drop out of the FTSE 100 after an unhappy 12 months, with its shares having hit an all-time high of almost 1,700p last August but the recent knock-back from US regulators for the big generic drug in its pipeline hit investor sentiment and full year guidance.

The drugmaker is the corporate equivalent of a yo-yo club having been promoted in March 2015 before being relegated a year later and then quickly returning to the blue chip list the following quarter.

Intu, even though its shares well bid on Wednesday, has sunk below a £4m market cap despite the former Capital Shopping Centres Group declaring its first dividend increase in a decade.

Investor sentiment has been hit by fears for the future of bricks and mortar shops due to the structural shift to online shopping, while consumer confidence worries are also likely to have weighed on the owner of shopping centres including Gateshead’s Metro Centre, Lakeside in Essex and Manchester’s Trafford Centre.

Security giant G4S looks like it has fought its way back to the FSTE 100 after being sent packing in December 2015 following a long decline that peaked with the scandal of being found to have overcharged the government on offender-monitoring contracts.

Analyst Nicholas Hyett at Hargreaves Lansdown noted that the company is midway through a far-reaching restructuring under chief executive Ashley Almanza to help rebuild margins, with 29 businesses already sold off and a further 27 on the block.

Hyett said promotion-seeking Sirius Minerals is a longtime favorite among retail investors on the AIM market.

"It has been furiously raising money of late as it looks to embark on the next stage of development for its Yorkshire Polyhalite mine. With plans to build a huge mining facility directly under a National Park, many were sceptical that the project would ever get off the ground. However, regulatory approval is now in the bag and several large investors are on board.

"The move to the main market and FTSE 250 suggests there may now be appetite for the project among the large institutions who are unable to invest in AIM stocks,” he said.