The UK Stock Exchange regulatory outfit FTSE International (Financial Times and Stock Exchange) is expected to set up an index based on publicly quoted technology firms by the end of the year.
But FTSE International?s attempt to take on US stock exchange Nasdaq with the introduction of such an index has raised questions on how to define businesses with an IT portfolio.
A representative for FTSE International said the creation of the high-tech index is designed to reflect the growing importance of IT in Europe. But he added: ?What the technology index covers is a contentious issue.?
The review of the UK industry classification system, which means companies with a high technology focus will be grouped in a number of sub-sectors, is being undertaken by 30 brokers and heads of research based at various companies.
The representative commented: ?Brokers reviewing the index have pointed out problems, in that you might put a bio-tech company with an internet company.?
He added that the classification of certain firms could be difficult. ?For example, engineering could be in the engineering sector, but could also be included in the technology index.?
Wayne Channon, managing director of networking distributor Ilion, said: ?I think it will be very difficult to define, but it will be good for technology companies to be classified together.?
However, Channon warned: ?It is going to be volatile because shares in technology companies go up and down dramatically.?
But the FTSE International representative insisted that ?there is an investor demand for the index, as there is already an index for technology in the US?.
The series of high-tech sub-sectors will be launched at the beginning of next year, with the intention of raising company profiles as well as an understanding of technology. A final decision on when the technology index will be introduced will taken in October.
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