FTSE 100 reshuffle: ITV set to tumble from the big league
The FTSE 100 is set for another dramatic reshuffle as the blue-chip index adapts to life during the coronavirus pandemic, with telly stalwart ITV almost certain to drop from the list and bargain retailer B&M likely to rise.
FTSE Russell, which runs the index, will decide who’s up and who’s down according to prices at the end of today. The changes will then come into effect on 21 September.
The coronavirus pandemic has dramatically altered the UK corporate landscape. The travel, energy and banking sectors have been battered, while online retailers, supermarkets and technology firms have performed better.
ITV hit hard by virus ahead of FTSE reshuffle
In the coming quarterly reshuffle, ITV is set to fall out of the prestigious FTSE 100 index. Already under pressure from the likes of Netflix, its advertising revenue has slumped during Covid-19 as companies cut costs.
“September should have been a month of celebration for ITV as it marks the 65th year since the iconic TV company was founded,” said Susannah Streeter, senior investment analyst at Hargreaves Lansdown. “Instead, it could be retiring from the FTSE 100.”
“The Love Island broadcaster’s revenue has fallen dramatically as companies have cut advertising spend,” she added.
In March, the company cancelled its 2019 dividend. The group’s market value has fallen around 60 per cent this year.
Bargain retailer B&M could rise
Discount retailer B&M is likely to win promotion to the big league. It currently in the top 90 UK companies by market capitalisation, putting it in line for automatic promotion.
Helal Miah, research analyst at The Share Centre, said: “It is a rare thing to see a physical retailer doing well.”
“But B&M has been a significant beneficiary of the crisis. As a discount retailer, it has already been doing well in recent years from the increased economic uncertainties but Covid-19 has led to sales jumping.”
British Land ‘teetering on brink’
Also near the drop zone are packaging firm DS Smith and property development company British Land.
Property firms have staged something of a comeback since construction was allowed to restart. But with people working from home they are now feeling the pinch from their corporate portfolios.
Russ Mould, investment director at AJ Bell, said British Land is “teetering on the brink” around the 110th position. “Any further slippage could open the door to a FTSE 250 firm and a number of companies are jockeying for position.”
“They include former FTSE 100 members Direct Line, Convatec, Weir and Foreign & Colonial Investment Trust,” he said. “[They] were last relegated in September 2019, December 2017, September 2015 and September 2009 respectively.”
At the last reshuffle in May, airline Easyjet, British Gas-owner Centrica, cruise firm Carnival and aerospace firm Meggitt were all demoted.
They were replaced by antivirus software firm Avast, gambling group GVC, home repairs group Homeserve and B&Q-owner Kingfisher.