New index spurs IT shares to fresh highs

Information technology (IT) shares continued to sparkle yesterday on their first day as part of the Stock Exchange's new IT index.

Despite the reduced trading hours and subdued trading activity, the index's largest constituents surged ahead.

IT shares have risen sharply since the formation of the index was first announced at the beginning of December. In the past month, many IT shares have posted gains of between 10 and 20 per cent as institutional investors attempt to adjust their weighting to the sector.

FTSE International, which administers the Stock Exchange's indices, had originally planned to introduce the index at the end of 1998. But the launch date was moved forward due to demand from investors. The index is currently a component of the Support Services sector, but is expected to become a sector in its own right.

IT consultancy firms were particularly in demand, with Logica putting on 20p to 1,177.5p, CMG gaining 7.5p to 1,532.5 and Sema closing 5p higher at 1,487.5p. Also in demand were software developers Misys, up 12.5p to 1,842.5 and Micro Focus, up 12.5p to 2,405.

Although the index includes 88 stocks, the majority are small companies. Five large companies - Sema, Misys, CMG, Sage and Logica - account for over 40 per cent of the index's value.

- Peter Thal Larsen