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Fund managers slam plan for hi-tech index

CITY FUND managers are at odds with IT firms over the London Stock Exchange's proposals to create a separate market for hi-tech companies.

The majority of UK-based IT groups favour a dedicated growth market, but almost three-quarters of smaller company fund managers think the LSE's plans for a new technology stock market called Techmark, to be unveiled later this month, is unnecessary.

The findings, which emerged from a survey by Granville, the investment banking boutique, come as a surprise given the huge support among investment banks, which have long complained that Britain is missing out on the Internet listings boom because of the lack of a suitable market here.

While fund managers acknowledge the difficulties facing growth companies, many of the 72.5 per cent who did not back the Stock Exchange proposals thought changes needed to be made within the LSE itself. An almost uniformly negative view of the Alternative Investment Market, introduced three years ago as a junior market for smaller companies, made the managers sceptical about the success of another new market.

Among fund managers who did favour a new London market for growth companies, 50 per cent said the exchange should be a version of Nasdaq, rather than a new LSE market. The US exchange was rated by fund managers and IT chief executives as providing the best support for growth companies. Sixty three per cent of IT bosses are behind the LSE's Techmark initiative.