Berkeley Group will be driven out of the FTSE 100 in the first shake-up of the index since the Brexit vote after pessimism about the UK’s property market hit the shares of the British housebuilder.
Berkeley will be replaced by gold miner Polymetal International, which has been a big beneficiary of the referendum result as investors searched for safe havens in a time of economic uncertainty. The FTSE is expected to confirm the changes on Wednesday.
Shares in Berkeley have fallen 19 per cent since the vote, making it the 112th largest UK company by market capitalisation on Tuesday.
Membership of the indices is reviewed each quarter, with companies automatically deleted from the top index if they fall out of the top 111.
Berkeley will join the mid-cap FTSE 250 index next Monday.
The weakness of sterling has helped the FTSE 100 recover since the Brexit vote to reach 14-month highs but property groups have largely missed out on the rally. Investors are concerned about the impact of economic uncertainty on these companies’ sales volumes and prices.
The swap with Russia-focused Polymetal marks a turnround from three years ago, when the miner was replaced in the FTSE 100 by housebuilder Persimmon and builders’ merchant Travis Perkins. Polymetal shares have almost doubled this year, and are up 31 per cent since the EU referendum.
Despite a recent slide, the price of gold, which is treated as a haven in times of economic uncertainty, has risen 25 per cent this year, and companies exposed to the metal have climbed in tandem.
Vitaly Nesis, Polymetal chief executive, said that while the company’s shares had benefited from the rising gold price, its production outlook was also “meaningfully stronger” than three years ago. “There has certainly been a tailwind from the gold price — but it found ready sails,” he said.
Chip designer Arm Holdings is expected to leave the FTSE 100 upon completion of its takeover by SoftBank before the next membership review, and will be replaced by one of the FTSE 250 groups Smurfit Kappa, Micro Focus, Croda, Aberdeen Asset Management, the Scottish Mortgage Investment Trust and Rightmove.
At the bottom of the mid-cap index, car dealership Pendragon and Circassia Pharmaceuticals, whose shares suffered after trials of a new cat allergy drug failed, will be replaced by online gambling group GVC Holdings and energy services group Hunting.
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