Old Economy set for triumphant FTSE 100 return

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The Independent Online

The Old Economy's return to favour is set to become official today with brewing, construction and logistics groups expected to end the brief sojourn in the FTSE 100 of four of the index's highest-profile new economy stocks. The quarterly index reclassification also sees the departure of several internet floats from the FTSE 250.

The Old Economy's return to favour is set to become official today with brewing, construction and logistics groups expected to end the brief sojourn in the FTSE 100 of four of the index's highest-profile new economy stocks. The quarterly index reclassification also sees the departure of several internet floats from the FTSE 250.

Out of the lead Footsie index will go Psion, maker of hand-held computers, Baltimore Technologies, the internet security firm, and telecoms upstarts Kingston Communication and Thus. Hanson, the builder, and Scottish & Newcastle, the brewer, are back in after three months away. They are joined by Ocean, the logistics business now merged with rival Exel, and Bookham Technology, the fibre optics company which floated after the last reclassification in March.

The ejections from the FTSE 250 include Vocalis, the voice recognition company which spent just one day in the index after making it to the reserve list in March. It is joined by 365 Corporation and Moneyextra, the first internet companies to list in London after Freeserve last year. The old economy dominates FTSE 250's new members list, although some tech stocks have sneaked in by moving from Aim to the main market.

The FTSE Equity Indices Committee meets today in Paris to rubber stamp the changes, which come into effect on 19 June and are based on companies' market capitalisations. The four companies departing the Footsie soared earlier this year as investors piled into tech stocks. But their elevation to blue-chip status in the biggest ever shake-up of the indices in March came just as the technology bubble began to deflate. Since March, the techMark 100 index of New Economy stocks has lost 37 per cent of its value.

"The outs are definitely overvalued tech stocks," said Steve Russell, UK equity strategist at HSBC. "Ocean is an interesting entrant as a half-way house, a wheels and clicks company distributing goods at the end of the internet."

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