As expected (CI No 3,202), FTSE International yesterday announced its plans to create a sub-sector for information technology companies on the Footsie Financial Times Stock Exchange Index – a move likely to increase visibility and investment in UK-based computer companies. The sub-sector, which will be included within the Support Services sector where computer firms are currently grouped, will be used to calculate an index from early next year – the first time that’s been done from a sub-sector – giving IT companies more visibility immediately. The decision was made following a meeting of the FTSE Acturies Industry Classification Committee on Monday 1, following pressure from fund managers demanding a separate, Nasdaq-style category. But the Committee decided not to create a separate index category, as rules say that any sector should equal 1% of total market capitalization of the companies listed on the Stock Exchange Official List. Currently IT-related companies equal a value of only 0.83%. If the sector continues to grow FTSE says it will review the situation again in the second half of 1998. Of course the sector may shrink if some eligible firms are acquired by non-UK companies during that time. But FTSE’s managing director, Mark Makepeace, says it is probable that this sub-sector will be made into a separate index industry category by the end of 1998.
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