Royal Mail delivered into FTSE 100 Index at expense of Hammerson

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Royal Mail has reversed its demotion and been delivered back into the FTSE 100 Index after a pay and pensions settlement helped ward off industrial action.

Shares have rallied since a 10-month dispute with the Communications Workers Union over plans to replace the defined benefit pension scheme came to a close in February.

The market has sent its stock price up 51% since early November, securing a market capitalisation of £5.6 billion.

In a contrast of fortunes, Hammerson has been relegated to the FTSE 250 Index after the shopping centre landlord saw its share price slide in response to market concerns over the woes on the high street.

The tough trading conditions facing retailers have intensified in recent months, with surging inflation and paltry wage growth prompting consumers to tighten their belts.

Hammerson shares have sunk more than 18% since the start of the year despite December’s announcement of a £3.4 billion deal to snap up industry rival Intu.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said Royal Mail is now trading at its highest level since 2014 and around 70% higher than the price set by the government in the 2013 market flotation.

He said: “Royal Mail has had to cope with pay negotiations alongside cost cutting and modernisation. Technology has been both a blessing and a curse for Royal Mail.

“It has led to 22% decline in addressed letters in the last five years, but at the same time online shopping has significantly increased the number of parcels whizzing around.”

AA will be licking its wounds after the motor breakdown specialist continued its bumpy ride by crashing out of the second tier.

It comes after the firm saw its stock market value plunge by nearly a quarter last week after warning over profits. AA is also revving up investment in the business at the expense of shareholder payouts.

Joining AA’s second-tier exit is Acacia Mining, N Brown Group, Dignity, Hansteen Holdings, MITIE Group and Vectura Group

Ready-meals maker Bakkavor Group, Baillie Gifford Japan Trust, Charter Court Financial Services Group, ContourGlobal, Games Workshop Group, On The Beach Group and Pantheon International have all won promotion to the FTSE 250.

The changes will be enforced on March 16.