Petropavlovsk POG, Polymetal POLY, still trade, Evraz EVR suspended

Polymetal (LON: POLY) shares, Petropavlovsk (LON: POG) and Evraz (LON: EVR) shares are all to be dropped from their respective indices. So, Evraz and Polymetal will drop out of the FTSE100, Petropavlovsk leaves the FTSE250. This is not because of sanctions or the unpleasantness, or not directly. Two of those three shares, POLY, and POG, remain tradeable in London.

The reason all these are moving out of the indices they were previously part of is because they have fallen so substantially in value. Of course, that is to do with the unpleasantness. But this stage of the index removal is simply to do with the size of the market capitalisations of each company. If there’s an index of large companies – the FTSE100 is one such – and you’re no longer a large company, the way the index measures that, then you’ll stop being in the index.

Polymetal has put out a release pointing out that while they’re not to be in that index anymore, it’s still possible to trade the shares. So, they drop out of the FTSE100 but it is still possible to buy and or sell. Petropavlovsk drops out of the FTSE250, again because the corporate valuation has fallen so that it is no longer one of those large companies to be included in that index.

Also Read: Base & Precious Metal Trading Guide

Evraz is of course different. Evraz shares are suspended because of the associations with Roman Abramovich. The company says that it is looking for clarification on this matter, the FCA suspended the shares awaiting that further information. The Evraz suspension could be short-term, could persist, no one knows as yet.

The more specific issue here is that Polymetal and Evraz should have left the FTSE100 and joined the FTSE250 – Petropavlovsk would have dropped out of indices altogether. But those two shares are now not to join the FTSE250. Evraz for fairly obvious reasons, the suspension means no trading. But Polymetal, that’s not to join the FTSE250.

The reason given is that all three companies are finding trading restricted – absent any of the actual rules on sanctions. Some brokers decline to handle them or limit trading to market professionals. Some institutions simply do not want to be involved in trading shares in such companies for the present. As is everyone’s right, of course, this is indeed a free market.

But what this means is that there is no longer enough of a large and liquid market in these shares – Polymetal is the hardest hit here as it would have joined the FTSE250 except for this reason. As there is no large and liquid market given current circumstances then they’re not reflective of that larger market and so shall not be in the indices.

It is still possible to trade Polymetal and Petropavlovsk in London, Evraz is suspended. The inclusion or not into the indices, whether FTSE100 or FTSE250, does not change whether the shares can be traded.