Bunhill: Index pulls its finger out

AN ENGLISH David is taking on not just one, but two Goliaths in the esoteric world of stock indices.

Last week the Financial Times launched a new series of British-based indices, while the newly united German stock exchange is proposing to launch its own Europe-wide index.

But already making its presence felt in the field is IndEC, an unofficial British-based competitor that covers a carefully weighted set of stocks from every country in the European Community.

The IndEC index is calculated back to January 1987, well before the crash of October 1987. More crucially, it is subdivided into 18 sectors. These show, among other useful information, how far the cheerfulness of European markets since Black Monday is based on two booming, if mutually hostile sectors: pharmaceuticals, and drinks and tobacco.

IndEC is the brainchild of Bryan Moynahan, a former European editor of the Sunday Times, who secured financing from Venture Link, a venture capital outfit backed by a number of leading insurance companies and pension funds. IndEC is already starting to replace one competitor, the FT's Eurotrack 100, which originally excluded any British stocks (either because it didn't want to compete with the paper's own British-only indices, or because the FT believed we weren't in Europe).

The markets have largely ignored the index, even after the FT added the FT-SE 100 to create the Eurotrack 200. Unfortunately, the non-British companies in Eurotrack have to be quoted on the London Stock Exchange, a requirement that has excluded such large companies as France's top insurer, UAP, and a number of important German concerns, including Commerzbank, Thyssen, Karstadt, the stores giant, and Hochtief, the country's biggest construction firm.

IndEC should also be more reliable than the proposed German stock exchange index, which apparently is only going to include 30 stocks, against IndEC's 250.

IndEC is already available on Reuters on a daily basis and will go real-time from the beginning of November.

Although it is taken by Handelsblatt, the German equivalent of the FT, the Suddeutsche Zeitung and the Belgian paper Echos de la Bourse, no British newspaper has yet taken the plunge.

Perhaps the FT has got it right and we aren't in Europe after all.