Smurfit Kappa poised to join FTSE 250

Smurfit Kappa, the paper packaging giant with a €5.9 billion market capitalisation, is poised to join the FTSE 250 after a rejig of the London index series is announced this week, according to analysts.

Last month, Smurfit Kappa said it had moved its Irish exchange listing to a secondary one as it upgraded its UK listing to a premium one, in an effort to pave the way for its entry to the FTSE indices.

There had been some market speculation in recent months that its market capitalisation would springboard it into the benchmark FTSE 100. However, it looks set to miss out on automatic qualification, according to Gerard Moore, head of Irish equity research at Investec in Dublin.

Although FTSE would count among the top 100 companies in the FTSE series, at 94, only those in the top 90 that aren’t already in the index would qualify for automatic qualification. Similar, once a FTSE 100 company falls to 111th position or below is automatically relegated to the FTSE 250.

Funds

“Still, there will definitely be a lot of funds that follow the FTSE indices which will be buying Smurfit Kappa in the coming weeks,” said Mr Moore, adding that much of the buying by passive funds will likely take place on Friday, June 17, three days before the changes take place.

Some actively-managed funds may also be prompted to buy Smurfit Kappa shares in the lead-up to the index overhaul taking effect, in the anticipation that that funds that track the index -- or passive funds -- will be forced buyers of the stock.

The cut-off date for the quarterly review is close of trading on Tuesday, with an official decision scheduled for Wednesday.

UK satellite communications group Inmarsat is widely tipped to be kicked out of the FTSE 100, less than a year after joining the index, after shares in the company were sold off earlier this month after warning that its sales would be lower than expected. It will most likely be replaced by pharmaceutical group Hikma. which itself was relegated in March.