Technology, as I have mentioned before, cannot be ignored

Holidays do not always put me in a good mood, but I returned from my brief sojourn feeling generally better about the market. And why not? The BBC World Service had kept me up to date with the rebound of technology shares. How sad, then, that the first thing that should happen on my return should be some TMT (telecoms, media, technology) profit taking.

Holidays do not always put me in a good mood, but I returned from my brief sojourn feeling generally better about the market. And why not? The BBC World Service had kept me up to date with the rebound of technology shares. How sad, then, that the first thing that should happen on my return should be some TMT (telecoms, media, technology) profit taking.

The rebound in the sector had been dramatic during recent weeks, with the FTSE 100 Index being re-jigged yet again to the benefit of technology and media. Out go such stalwarts as Scottish & Newcastle, Hanson, Rolls Royce, Associated British Foods and Corus (British Steel). In come Dimension Data, Spirent, Granada Media, Electrocomponents and Baltimore Technologies.

But it is the yo-yo effect of these changes that give greatest cause for concern. Scottish & Newcastle and Associated British Foods were victim to the last but one shake-out in the Index when, in total, nine old economy stocks were replaced by TMT newcomers - ten if you count Natwest Bank, which was also replaced by a new economy company.

Among the companies that entered then was Baltimore, a relatively new enterprise in encryption techniques. Three months later it was about turn, with Scottish & Newcastle re-entering and Baltimore becoming a victim of the slide in technology shares that started in March. Here we are, three months later, with the positions being reversed yet again.

All five new entrants to the Index are in technology and media, but Baltimore is the only re-entry. Dimension Data, a South African software house, joins a band of companies that have forsaken Johannesburg to maintain their primary listing in London.

As with Granada Media, a consequence of the merger and then de-merger between Granada and Compass, Di-Data (as it is known in the Cape) did not exist when the latest FTSE re-shuffle took place and the company is of such a size that inclusion was inevitable. Spirent and Electrocomponents, the other two entrants, had strong demand for their shares in recent weeks.

You can understand the frustration that some managing directors must feel when they see their shares bob in and out of an Index as prestigious as the FTSE 100. Aside from anything else, it creates natural buying and selling pressures. Managers of indexed funds had to sell Scottish & Newcastle earlier this year when it dropped out, only to buy again at the beginning of June. Now they are selling shares again.

For investors with a more fundamental approach, the resurgence of the TMT sector - or to be more truthful, of technology and media since telecoms remains under something of a cloud - shows there is always an over reaction to any market reassessment. Perhaps we are now seeing a fairer valuation of technology stocks. I hope so. It is still the fastest growing business sector in world markets. Technology, as I have mentioned before, cannot be ignored.

Brian Tora is Chairman of the Greig Middleton Asset Allocation Committee

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Recruitment Genius: Outbound Sales Executive - OTE £25,000

    £16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

    £45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

    Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

    £35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Day In a Page

    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project
    Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

    Diana Krall interview

    The jazz singer on being friends with Elton John, outer space and skiing in Dubai
    Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

    Pinstriped for action

    A glimpse of what the very rich man will be wearing this winter
    Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

    Russell T Davies & Ben Cook: How we met

    'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
    Bill Granger recipes: Our chef serves up his favourite Japanese dishes

    Bill Granger's Japanese recipes

    Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
    Michael Calvin: How we need more Eric Cantonas to knock some sense into us

    Michael Calvin's Last Word

    How we need more Eric Cantonas to knock some sense into us