Now, at last, FTSE International, which manages the London share indices, is creating a separate sector for IT stocks, although it may not be until the end of 1998 that a new sub-index covering the sector will be regularly quoted.
Shares in the five biggest London-quoted IT companies rose after the decision to launch the sector was made public. Whether they will continue higher is a moot point. Most IT companies already have very high price/earnings ratios. The likes of Logica, Sema, Misys and Sage all have p/e ratios higher than the market average, in some cases more than double the p/e for the market as a whole of between 17 and 18.
However, optimists can point to the fact that the European software and services market has been growing at an annual rate of around 20 per cent for most of the 1990s. Companies contained in the new IT sector show average share-price gains of 87 per cent in the past three years, compared with a rise of 57 per cent in the FTSE 100 index.
One reason London has woken up to the need for a separate sector for IT stocks is the steady march of UK companies across the Atlantic, seeking listings on the US Nasdaq market. Nasdaq is the market of choice for US hi-tech and IT companies. US investors are more attuned to such investments. Many are looking for the next Microsoft and are more receptive to new IT stocks.
This difference in attitude carries over into websites. The London Stock Exchange's site offers only a basic guide to how the market works and has no current or even historical price data, although there are links to the FTSE, Liffe and Crest websites. By contrast, the Nasdaq site begins with a welcome page offering information on the best way of viewing the site depending on which version of browser software, and even which computer system, you are using.
However, if you are unwilling to take a chance on the real markets, why not try your hand at two new on-line stock market games, Global Best Six and Global Trader, from Global Stock Games?
The games are based on the daily developments in a selection of companies from 12 international stock markets. The accountants Ernst & Young monitor and audit the game results and payouts, and market information comes from Dow Jones and Reuters. Each game will cost you about pounds 2.95 ($5) to play and the entrance money provides the revenue for prizes.
London Stock Exchange: www.londonstockex.co.uk
FTSE International: www.ftse.com
Global Stock Games: www.stockgames.comReuse content