The Weir Group and abrdn could be set for promotion back into the stock market big leagues.
A report from investment platform Hargreaves Lansdown stated that while it has been a volatile year for Edinburgh-based investment company abrdn, with shares dragged down by financial market volatility earlier in the year, in recent weeks a rising appetite for risk has sent its share price sharply upwards.
Outflows from its funds had caused nervousness among investors and it was ejected from the FTSE 100 at the last review.
But Investor confidence in sectors around the world has jumped over the past month, helping to restore optimism about the company’s prospects, particularly given that it’s known for emerging markets and smaller companies’ funds.
‘’A bolstered direct-to-consumer offering and improved proposition are all welcome developments which could also help deliver an about turn in revenues,‘’ read the note, although it cautioned that abrden will have to generate sustained inflows to remove the risk of fresh volatility returning to the share price.
Meanwhile, Glasgow-based engineering firm Weir is also a close contender for re-entry to the FTSE 100, according to Hargreaves Lansdown.
‘’It took the opportunity to refocus on mining during the pandemic, moving away from the oil industry,‘’ the report stated, although share performance has been volatile, as worries about global growth and the ongoing effects of China’s zero-Covid policy have continued.
Optimism that its long-term strategic shift will pay off over the longer term, paired with resilient recent results - showing strong demand from the sector for its equipment, with order numbers up by almost a fifth over the last quarter - should see the group move back into the top 100 London-listed companies.
Also mentioned in the update was Harbour Energy, which has been ’’sideswiped’’ by the confirmation of an increase in a windfall tax on North Sea oil and gas producers.
Pleas from chief executive Linda Cook for Chancellor Jeremy Hunt to look again at taxing profits went unanswered. The company said that the levy will drive investment out of the UK altogether, warning that the associated tax credit would not protect projects and jobs.
The company has also been hit by recent falls in the price of crude, prompted by worries about the ongoing Covid crisis in China, with rolling lockdowns back in place in major cities after fresh outbreaks. Harbour's price has fallen by around 30% over the last six months, making it one of the most likely candidates to drop out of the FTSE 100 in the December reshuffle.
Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown: ‘’Volatile markets and concerns about the prospects for global growth are the headwinds driving changes in the FTSE 100.
’’Investor risk appetite appears to be returning despite the uncertainty ahead, which is helping the fortunes of arbdn, which was relegated to the FTSE 250 at the last reshuffle, but could return soon return to the top flight.
’’However, the lower oil price and worries about the impact of the larger windfall tax in the UK has weighed heavily on Harbour Energy, pushing it into the relegation zone.’’
The FTSE All Share Index quarterly review is based on market capitalisations on 29 November and announced the following day, with changes taking effect after the close of business on 16 December.
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