New Entrants to the FTSE-100
Life as we know it has changed considerably over the last few months. Cruises have been replaced with trips to the garden centre and the beach holiday is now taking place in the back garden. The FTSE 100 has mirrored these changes and it has made quite a difference for some companies.
On June 22nd four new businesses are due to enter the FTSE-100 reflecting the commercial impact of the Covid-19 crisis on businesses.
Avast is a supplier of anti-virus and security software and has benefited from all the homeworking that has been a theme of Covid-19.
GVC Holdings is an Isle of Man based betting and gaming company, which took over Ladbrokes in 2018, having previously acquired Sportingbet and bwin. It was ejected from the FTSE 100 in March after its share price halved in the wake of the Government’s crackdown on Fixed Odds Betting Terminals and sporting fixtures disappearing. The prospect of sport gradually returning has lifted the shares by 150% above their March low.
Homeserve operates in the domestic environment, supplying emergency and repair services in the home. Its share price nearly halved in March, but has since recovered to previous levels on the back of better than expected profits and business from stay-at-home customers.
Kingfisher, owner of B&Q, returns to the Footsie three months after being ejected. It too has benefited from the furloughed millions with time on their hands, as well as DIY retailers being one of the earliest sectors to reopen.
The four companies falling out of the index are:
Carnival is a company that has several large fleets of cruise ships, including Princess Cruises and P&O Cruises. Its share price has cratered: having started 2020 at 3644p, it closed on Friday as at 1431.50p more than double the 605p it fell to at the start of April.
easyJet has not escaped the impact of the groundings across its European base. Its share price has nearly halved since mid-February. A dispute with its largest shareholder and founder, Sir Stelios Haji-Ioannou, has not helped.
Meggitt is not a well-known name, but all becomes clearer when you look at its main business - supplying parts to the aerospace industry, notably for the Boeing 737 Max. Again, its share price has more than halved since February.
Centrica is not involved in the travel industry, making it the odd one out. Its main business is British Gas, the long-ago privatised utility company. Utility price caps, and a slashed and subsequently suspended dividend have impacted the business. Its share price has also halved since February
Reaction seems mixed with commentators believing that Avast and Homeserve will remain in the index for the long-term, whilst both Kingfisher and GVC maybe "short-term visitors"
