BKHM.......as of mid June, from BBC.......Some of the technology stocks that joined the FTSE
100 in the last index reshuffle in March have now left
the index again.
Psion, Baltimore Technologies, Kingston
Communications and Thus no longer have high enough
valuations to stay in the index.
The sell-off in technology stocks worldwide has hit
these companies hard and "old economy" stocks are
now set to make their way back into the index.
The index committee
announced late on
Wednesday that Hanson,
Scottish & Newcastle,
Bookham Technology and
Ocean Group will replace
them.
Pharmaceutical group Celltech, which also joined in
March, has been saved from relegation by a recent
rally in its share price. The changes to the index are
based on Tuesday's closing price.
New wave over?
When they joined in March, the move was hailed as a
brave new dawn for tech stocks and the biggest
shake-up of the index since it was launched in 1982.
Their quick exit from the market may be unusual but
as one equity analyst said "look at the market for the
last six months, is that usual?"
"It's normal service re-establishing itself," said Jeremy
Batstone of NatWest Stockbrokers.
"The surprise is not so much the fall in the 'new
economy' companies but the tail-wind that prevailed
over the previous 12 months."
Tremendous volatility in stocks worldwide has seen
the valuations of many technology companies
slashed, with many investors opting to put their money
in what they perceive to be safer stocks.
Worries about profit
The volatility has been triggered by fears that many
internet companies' profitability will never match their
valuations.
This has been compounded by rising interest rates,
which cut into corporate profits, as the US central
bank has tried to bring the booming economy gently
back to earth.
"They were caught up in a wave which bumped them
into the FTSE and which may bump them out again,"
one equity analyst said.
There have been few fundamental changes in the
fortunes of these companies.
"All these stocks have core strengths, which haven't
changed in the past three months," he added. |
