Out with textiles and in with IT in FTSE's end-of-year review

Week ahead

A new stock market sector has appeared. Quietly and with the minimum of fuss, information technology companies have been given their own playing field, complete with an FTSE sector index.

Footsie International, the organisation behind the range of market indices, has been preparing for the IT debut for some time. Companies involved are consulted; their views taken on board.

The creation of an index is an important development for shareholders. It could lead to re-ratings.

Many of the IT groups have enjoyed a remarkably cheerful run since it became apparent they would form a stand alone sector. Before their "independence" most were lumped in with support services companies.

Among those to benefit from the signalled IT sector and push ahead in the past month are Lynx and Sherwood International. The suspicion the new index will have a beneficial influence lifted Lynx, which started life as a company developing hotel safes, from 99p to 128.5p; Sherwood had an even more impressive run, going from 365p to 572.5p.

Stockbroker Granville Davies believe the IT performance of fund managers will be measured against the new index. "This may well nudge prices even higher as those which are underweight attempt to achieve a full weighting."

The IT sector embraces 88 companies including five MidCaps and 24 AIM stocks. The largest constituents are Misys, capitalised at approaching pounds 2.1bn, and Sema at pounds 1.7bn.

Composition of the sector is already arousing comment. There seems to be a move to include more IT recruitment companies. As Granville Davies point out 74 per cent of CRT's turnover comes from IT services yet it is in the Education, Business and Training sector. Among others excluded are SBC Group, which collects all its revenue from the provision of IT staff, Highams Systems Services (90 per cent) and Harvey Nash (75 per cent). The stockbroker suggest those which feel they have been overlooked will be pressing for inclusion.

The index changes were not confined to the creation of the IT sector. It was also decided to end the existence of the textile and apparel sector, merging it with household products.

Big sector changes are made at the start of the year. For many years there were no substantial changes, just the occasional gentle tinkering. But what appeared to be a realistic division in the 1970's looked out of place in the much more classification conscious 1990's. So five years ago there was an overhaul which led to the removal of some rather bewhiskered, rather quaint sectors, such as Drapery and Stores.

The drinks industry is one area which has felt the reforming zeal of the index men. Until the government's Beer Orders quoted pub companies were conspicuous by their absence. The late Maxwell Joseph had swallowed the last quoted independents in the 1960's when his Grand Metropolitan empire took over Levy & Franks and Shorts. In those days pub portfolios were seen as essential adjuncts to a brewery.

But the Beer Orders forced the big brewers to unload vast chunks of their once cherished estates. And, as the Bass sale of its 1,400 remaining tenanted pubs demonstrates, the ownership of as many pubs as possible is no longer regarded as an essential part of the big brewers strategy.

The upheaval among the beerage led to the creation of a host of pub-owning companies. Many were backed by venture capitalists. They are not the most patient of souls and were not slow to press for a stock market presence so they could realise at least part of their investment.

With quoted restaurant chains, another phenomenon of the 1990's, it was felt there was a need to end the existence of the old Distilleries and Breweries sector which seemed an ill-fitting classification for pub chains as well as GrandMet, which by then had sold its breweries, and the likes of cider maker HP Bulmer.

Two new sectors were created - Breweries, Pubs and Restaurants and Alcoholic Beverages. There were some complaints and the sight of Harry Ramsden fish and chip shops rubbing shoulders with Scottish & Newcastle, the nation's largest brewer, caused some astonishment.

The split was possibly more beneficial to the breweries sector, which enjoys a higher rating than the alcohol segment.

A certain amount of bedding down follows an index reshuffle and FTSE International expect there may be some minor IT and textile adjustments.

"Any company which feels it has been misplaced should contact us and put forward its case which we will discuss with them," said a spokesman.

There had been expectations the drug sector would be changed with the fledgling element, the biotechs, stripped out. But FTSE International decided against any move. "It was felt biotechs are merely drug companies at an early stage of their development and should remain with the giants," said the spokesman.

A sector of the future could be football clubs. Fifteen are now on the market. More are expected. Perhaps they will get their own pitch at the next review.

News
Pro-Russia rebels guard a train containing the bodies of victims of the Malaysia Airlines flight MH 17 crash in Torez, Ukraine
i100
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
PROMOTED VIDEO
News
people
Arts and Entertainment
Struggling actors who scrape a living working in repertory theatres should get paid a 'living wage', Sir Ian McKellen has claimed
theatre
News
Skye McCole Bartusiak's mother said she didn't use drink or drugs
peopleActress was known for role in Mel Gibson film The Patriot
News
i100
Arts and Entertainment
Damon Albarn is starting work on a new West End musical
artsStar's 'leftfield experimental opera' is turning mainstream
Life and Style
Paul and his father
artsPaul Carter wants to play his own father in the film of his memoirs
Sport
Ben Stokes trudges off after his latest batting failure for England as Ishant Sharma celebrates one of his seven wickets
cricket
Arts and Entertainment
Members of the public are invited to submit their 'sexcapades' to Russell T Davies' new series Tofu
tv
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Sky's Colin Brazier rummages through an MH17 victim's belongings live on air
i100
Arts and Entertainment
Keira Knightley and Benedict Cumberbatch star in the Alan Turing biopic The Imitation Game
arts + ents'The Imitation Game' stars Benedict Cumberbatch and Keira Knightley
Extras
indybest
News
i100... and no one notices
Arts and Entertainment
Friends reunited: Julian Ovenden, Richard Cant and Matt Bardock in rehearsals for the Donmar revival of 'My Night
with Reg'
theatrePoignancy of Kevin Elyot's play being revived just after his death
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

Training/Learning and Development Coordinator -London

£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

Business Analyst (Systems/ Incident Analyst)

£40000 - £50000 Per Annum: Clearwater People Solutions Ltd: Business Analyst r...

BA/PM - Client Data

£500 - £550 per day: Orgtel: BA/PM - Client Data London (Greater)

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor