Exchange gears for technology index

A new technology index this autumn to track shares in some of the UK's most innovative and fastest-growing stocks is set to be introduced in the autumn by FTSE International, the body that decides how companies are classified on the UK stoc k market. FTSE International is also considering a separate classification for biotechnology companies.

Steven Vale at FTSE International, jointly owned by the London Stock Exchange and the Financial Times, said there was growing need for independent technology indices like those that exist on US exchanges. "Fund managers want to develop specialist funds to tap companies which may have fast growth potential. Demand for a technology index is increasing," Mr Vale said.

The plan to single out biotechnology companies would not create a separate biotech index, but allow investors to identify biotech from "regular" pharmaceutical companies. Biotechs will be defined as those at the leading edge of research with a focus on R&D.

It would not be based on market capitalisation. As biotechs developed they would be reclassified as pharmaceutical companies, defined as those like Glaxo Wellcome which make and market drugs as well as develop them.

Although details of the names and number of companies qualifying for the technology index have not yet been finalised, a range of stock market sectors will be represented including all the biotech groups. Within the media sector, electronic data publishers, like, perhaps, MAID will be included. From support services, companies to be included are Internet groups, information technology consultancies and services companies and producers and distributors of computer software, Mr Vale said. Likely candidates are Sema, Logica, Parity, FI and RM.

The definition of engineering companies to be included are producers of components and equipment for the aircraft and defence sector. The technology index would be a sub-sector of existing classifications and companies would also be represented in their original sectors.

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