Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Polymetal pushes housebuilder Berkeley out of FTSE 100

Published 31/08/2016, 18:01
© Reuters.  Polymetal pushes housebuilder Berkeley out of FTSE 100
UK100
-
HTG
-
FTMC
-

By Sudip Kar-Gupta

LONDON (Reuters) - Housebuilder Berkeley Group has lost its place in the blue-chip FTSE 100 equity index after its stock price dropped, partly because of Britain's vote to leave the European Union.

FTSE Russell, which handles changes to the index, said on Wednesday that Berkeley would be replaced by Russian gold and silver miner Polymetal, whose shares have surged as economic uncertainty has driven up the price of gold.

A company's place in the FTSE 100 index is decided on the basis of its share performance and stock market value. Companies with the lowest market capitalisation get replaced by mid-cap companies with higher market capitalisations.

Demotion can lower demand for a company's shares as funds that track the index drop that stock from their portfolios. Companies that win promotion can attract more interest from investors.

The relegation of Berkeley and its replacement by Polymetal further highlight how the FTSE 100 has become increasingly exposed to the global economy rather than the British economy.

Berkeley shares closed up 3 percent on Wednesday, but the stock remains down by around 30 percent since the start of 2016. In contrast, Polymetal shares - which fell 5.6 percent on Wednesday - have surged 80 percent so far in 2016.

Housebuilders such as Berkeley and its rivals have suffered since June's Brexit vote as the referendum result starts to hit demand for housing.

Data this week suggested the British economy was slowly starting to feel the effects of the vote to quit the EU, with a post-Brexit slump in sterling making consumers more wary about their spending habits.

Bank of England figures showed mortgage approvals for house purchases fell to 60,912 last month from 64,152 in June, the lowest since January 2015. The decline continues slowdown that started at the beginning of the year.

However, the increased economic uncertainty resulting from the Brexit vote has pushed up gold prices and gold mining companies such as Polymetal.

FTSE Russell said online gambling group GVC and energy services company Hunting (LON:HTG) would win promotion to the FTSE 250 mid-cap index as car dealer Pendragon and Circassia Pharmaceuticals drop out.

The changes will take effect on Sept. 19.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.