A Year in Review: Winners and losers on the blue-chip index

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The Independent Online

With little expected in the next two days, this week we're looking over the year gone by and the changes on the FTSE 100 index of leading shares.

The year 2008 was a harrowing one – the banking sector buckled under as the financial crisis deepened, miners slumped as the commodity price rally unravelled, and the retail sector weakened as consumers tightened their purse strings. The prognosis for 2009 was therefore predictably grim.

And though traders were pleasantly surprised by the rally that took root after the market struck its low in March, the year began with two blasts from the past.

British Energy, which was the subject of a long-anticipated offer from France's EDF Energy in 2008, left the FTSE 100 as the deal was wrapped up. The vacancy was filled by Pennon, the water company, which had done relatively well as traders sought cover in defensive stocks. It moved up from the ranks of the mid-caps on the FTSE 250 on 9 January. Another reminder of the year gone by was forthcoming 10 days later, when HBOS and Lloyds TSB began trading as one entity. Lloyds Banking Group was conceived in the throes of the crisis, with the market learning of the plans just days after the Lehman Brothers bankruptcy.

That was it until March, when a turnaround in commodities prices pushed Lonmin, the platinum producer, and Fresnillo, the silver miner, back into the FTSE 100 in the first quarterly review. The two had been kicked out in December, as had Petrofac, the oil services group, which also made a comeback in the March review.

The testing and inspections firm Intertek and Foreign & Colonial Investment Trust were the other new entrants, while five companies were relegated – the London Stock Exchange, hit by worries about the threats posed by rival platforms such as Turquoise, was demoted, along with 3i, the private equity group. FirstGroup, the sugar & sweetener maker Tate & Lyle and Wolseley, the construction materials group, also lost their blue-chip status in March.

Three of the five made a swift comeback in the next review in June. Wolseley was supported by signs of stability in the housing market here and in the United States, while the London Stock Exchange benefited from confidence in the new chief executive, Xavier Rolet, who took over in May. 3i, which used its sojourn on the FTSE 250 to bolster its balance sheet by launching a rights issue, also reclaimed its place on the FTSE 100.

The same review saw Whitbread, the hospitality group which at the end of April had said that the performance of its Premier Inn chain had weakened in the first quarter, leave for the FTSE 250. Drax, the power station operator which was hit by a Standard & Poor's credit rating downgrade in May, also left, along with Amlin, the non-life insurance group.

The next change was an historical marker – Thomson Reuters, the amalgam of the Canadian data publisher Thomson Corp and Reuters, the British news and financial information provider, decided to leave the London market. Paul Julius Reuter had arrived in London from Aachen in 1851, and set up an office at 1 Royal Exchange Building in the City, transmitting stock-market quotes and news between London and Paris over a new telegraph cable. Reuters Holdings Plc began trading on the London Stock Exchange in 1984.

The decision was announced in June, and the company left the FTSE 100 in September, freeing up a space for Burberry, which moved up from the FTSE 250. Like the wider sector, the luxury goods retailer had rallied strongly as the market bounced off the lows struck in March. In an update in July, Burberry said it was taking market share "almost everywhere", particularly in the US.

Burberry's promotion was followed up by the results of the third index review of the year. Buoyed by the government's moves to boost liquidity, traders were increasingly focused on the recovery. Whitbread, which had been kicked out in the June review, and which at the beginning of September said it expected the out-turn for the full year "to be at least at the higher end of current market expectations", was beneficiary of the shift in sentiment, rejoining the benchmark index on the 21st of that month. The support services group Rentokil Initial and Segro, the industrial landlord which swooped on rival Brixton in the summer, also moved up to the FTSE 100 at the end of September. Defensive plays were the losers as recovery hopes took root, with Pennon, Foreign & Colonial Investment Trust and Balfour Beattie moving out of the benchmark index in the same review.

The final review took place earlier this month, with the changes being implemented on 21 December.

Rentokil was the loser, moving down to the FTSE 250, as Aggreko, the temporary power provider, made its debut on the FTSE 100.

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