FTSE Quarterly Review March 2015: Winners and Losers

After the closing bell yesterday the FTSE announced the results of its quarterly review, with the losers hardly a surprise.

There was only one switch in the FTSE100, with Tullow Oil falling out of favour, replaced with Hikma Pharmaceuticals. This slip by Tullow isn’t exactly a revelation; the oil price crash has obviously been a burden for the sector, and has weighed heavily on the FTSE as a whole. More often than not, the difference between the FTSE and the other global indices of late has been due to the large presence oil has on the UK index, and the troubles the FTSE has had in dealing with the regular plunges by its commodity stocks. The writing was on the wall for Tullow, then, when it was revealed that the company had run into issues with its TEN Project in Ghana and the Ivory Coast, with some key decisions going against the oil stock. With its market cap shrinking from £4.6 billion to £3.3 billion in around 9 months, the black stuff claimed another victim as Brent Crude’s prices continued to linger at $60 per barrel.



Hikma, on the other hand, has had a rapid rise to the top tier of the UK index, and continues to readdress the balance of pharmaceutical companies in the FTSE, something that has fallen to 8.5% from 11.1% back in 1999. In just 10 years Hikma has gone from IPO to FTSE100, a feat many considered unlikely back in 2005. Whilst relative small-fry when compared to the FTSE Big Pharma mainstays like AstraZeneca, GlaxoSmithKline and Shire, Hikma has grown its stock price by nearly 26% since last December, and its £24.70 per share price leavings it around 80th in the index.



There was more movement in and out of the FTSE250. The least surprising ejection was that of Afren; the stock has played economic yo-yo on the markets of late, as more and more news comes out highlighting the dire situation the company is in. The most recent news saw Afren announce it will default on a $15 million interest payment to its bondholders, only for this news to be followed up by another repayment extension for debts that were originally to be paid back in January. Given the messy, and potentially corrupt, nature of its business at the moment, something only exacerbated by the oil price issues, its departure from the FTSE250 was almost certain come Wednesday.



Elsewhere, Game Digital fell out of the FTSE’s lower tier, as it continues to be squeezed by online giants like Amazon. Despite its moves to purchase Multiplay Limited, an even and gaming community company, for £20 million, a profit warning in January left it with little room for a turnaround ahead of the quarterly review. The final exile was Oxford Instruments, a manufacturing and research company, which spent much of 2014 slipping before a precipitous fall at the end of January ensured its departure.



With three extra spaces up for grabs, Virgin Money Holdings, AA and Imagination Technologies Group were deemed worthy to ascend to the FTSE250. Virgin Money only floated in November, so has had swift progress into UK index’s lower tier; the news of its entry was followed by the announcement of a ‘record performance and profits’, with 127% growth on its 2013 pre-tax profits. Another swift mover into the FTSE250 was AA PLC, the motoring group and car insurer, which, like Virgin Money, only floated last year. Finally, Imagination Technologies Group made its entrance into the 250, despite Intel recently selling its remaining stocks in the chip designer; the tech company provides key components to Apple’s phone and computer ranges, and has ridden the upsurge that has surrounding Apple in recent years.