Smurfit Kappa in battle to join London’s FTSE 100

Paper packaging giant vies with Scottish Mortgage Investment Trust to qualify

Smurfit Kappa is involved in a three-way battle to secure one of at least two spots up for grabs this week on London's blue-chip FTSE 100 index.

With a quarterly review of FTSE 100 members due later in the week, based on Tuesday's closing market valuations, Smurfit Kappa is vying with Scottish Mortgage Investment Trust and medical products and technologies company Convatec to join the influential index, according to Colin Farley, head of quantitative analysis with Cantor Fitzgerald in London.

Three companies – precious metals mining group Polymetal International, builders' merchant Travis Perkins, and Intu Properties, a real estate investment trust focused on shopping centres – are facing relegation, he said.

A firm can be relegated from the FTSE 100 if its market capitalisation is ranked 111th or below among eligible companies. A new entrant can be added if it ranks 90th or above.


Relegation line

A 0.6 per cent gain by Intu shares on Monday leaves them just above the relegation line, meaning there are likely only to be two new spots in the index, according to Mr Farley. Convatec is well above the level needed for automatic inclusion, he said.

“Scottish Mortgage Investment Trust is currently 0.19 per cent higher than Smurfit Kappa, but the two had been battling it out throughout the day,” Mr Farley said after the London market closed. “Smurfit Kappa needs a strong day tomorrow to make it past Scottish Mortgage and finally get added to the FTSE 100.”

Cantor Fitzgerald estimates that funds which track the FTSE 100 would have to buy about £110 million (€128.6 million) of stock in the Irish paper packaging giant if it is promoted to the index.

Smurfit Kappa joined the FTSE 250 index in June.

Earlier this year the group, led by chief executive Tony Smurfit, changed 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.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times