Inside FTSE 100: Movers and Shakers
What is FTSE?
FTSE 100 is power house of the most influential companies listed on the London Stock Exchange (LSE). As the name suggests this group consists of 100 companies which are selected on basis of their market capital. To simplify it, this is a group of the top 100 shares to be traded on the LSE.
In terms of defining this group, FTSE 100 is also generally referred to as the “footsie” and is one of the most preferred and widely traded indices all over the world. Stocks traded on the FTSE are referred to as large cap stocks and FTSE together has a combined market capital of over 1,500 billion pounds. Considering that the market capital of all the combined indices on the London Stock Exchange is approximately $3.5 trillion, one can well imagine the FTSE 100 alone contributes to a little over 75% of it.
Members in the list of FTSE 100 are revised every quarter based on their performance and change in overall market capital. FTSE 100 is a part of the London Stock Exchange and is completely owned by it.
The Most Important Companies within this group:
If one really goes down to ranking the top 10 companies within this elite group, it would be simple for us to understand that these companies would be the biggest companies in terms of Nett Market Capital in Britain. These companies would also be the highest revenue generating companies for the nation.
Top 10 or the Heavy Weights in terms of Market Capital (in billions of pounds):
List of Top 10 dividend paying Stocks:
| Company Name | Payout Yield |
|---|---|
| Fresnillo | 8.39% |
| Scottish and Southern Energy | 6.40% |
| RSA Insurance Company | 6.12% |
| Resolution Group | 5.90% |
| Imperial Tobacco | 5.33% |
| Centrica | 5.29% |
| United Utilities Group | 5.20% |
| National Grid | 5.19% |
| Admiral Group | 5.09% |
| Morrison Supermarkets | 4.90% |
List of Shares in Terms of their Trade Volumes on an Average:
1. Lloyds Bank
2. Vodafone
3. Barclays
4. Glencore Xstrat
5. Aberdeen Asset Management
6. British Petroleum
7. HSBC
8. BHP Billiton
9. RSA Insurance Company
10. Centrica
The above representation would help you to analyze a company in terms of its market capital, trading volumes and profitability in terms of dividends.
Journey from Incorporation till date:
The FTSE 100 indices began trading on the 3rd of January 1984, at an index of 1000 points. Today’s levels are close to over 6000 points on an average. This signifies a growth of over 500% since incorporation. However the all time high for the FTSE 100 has been 6930 points, which indicates an approximate 85% decrease from its highest levels. The journey for FTSE 100 has involved a lot of up’s and down’s and the going has always been influenced with turn of events around the globe. However, most analysts consider FTSE 100 as a stable long-term investment option.
Difficult Times:
9/11
As we all remember this day tragically in the year 2001, the financial markets were to bare the indirect brunt of what happened after 9/11. The invasion of Afghanistan led to a diversification of a lot of funds from within the government and financial markets were casualty to what followed. The FTSE 100 was no stranger to this effect, at this point of time the FTSE experienced a freefall and investor portfolios were subject to huge losses.
Scandals
Accounting scandals broke out in 2002 involving certain British Companies like Enron and TYCO. This led to investor panic and a huge sell off. The financial markets including the FTSE were again affected by this. This also marked the entry of the world Economic Recession which saw stock prices in various business sectors tumble to their lowest.
USA Banking and Real Estate Crisis
In 2008 US was going through its worst banking crisis, with real estate prices crashing and the banking system defaulting. Financial Institutions like Lehman Brothers, Freddie Mac, AIC etc were in need of financial bailout. This led to the US government diverting a lot of funds to support the economy. As a result, a global financial crisis weakened financial markets all over the globe including the FTSE 100.
As economies around the world are interconnected and the world today is more like a Global Village, financial markets will continue to be influenced with developments across the world. The London Stock Exchange including the FTSE 100 and its other related indices are forming the fourth biggest stock exchange in the world. This summarises the need for investors to be patient, as the FTSE has always been an ideal investment option for the strong hearted and investors with a long-term prospective.