The FTSE in detail:
The abbreviation FTSE actually stands for ‘Financial Times Stock Exchange’. This major stock market index incorporates 100 British companies quoted on the London Stock Exchange, selected mainly according to their stock market capitalisation.
It should also be noted that the FTSE 100 Index is actually the popular Index of the London Stock Exchange.
To efficiently trade this stock market index using CFDs, it is important to first understand that the FTSE 100 is highly representative of the British economy and this country’s financial and economic health. It should be noted that the companies represented in this index embody roughly 80% of the total stock market capital on the London Stock Exchange.
However, all the companies quoted do not have the same weight relative to the calculation of this index. Therefore the results of these 5 most important companies should be followed closely; BHP Billiton, Royal Dutch Shell, HSBC, Vodafone and British Petroleum.
Historical rates for the London Stock Market Index:
The historical analysis of the FTSE 100 reveals valuable indications relative to the way it reacts to different economic situations and crises.
Initially quoted at 1,000 points, it was in 1999 that this index reached its highest historical level of 6,950.60 points. It moved in a saw tooth manner between 2006 and 2007, ending at 6,730.70 points.
As with the majority of international indices, the Footsie suffered during the subprime crisis and fell to around 5,495 points.
The economic crisis then dragged this index towards its lowest level of around 3,500 points during the year 2009. It then recovered somewhat by small hops up to the 5,500 point level in 2010 which was followed by a corrective downwards move.
Since 2010, the FTSE 100 has trended towards a rise. In fact a strong rise was experienced in July 2010 that enabled the 6,000 threshold to be breached, then, in 2011, this index stabilised at around 5,800 points.
The major companies incorporated in the FTSE 100:
The Footsie is therefore a British Index that takes into account the weighted floating capital of the 100 British companies that have the highest capital liquidity as quoted on the London Stock Exchange.
The FTSE 100 is quoted continuously which means that its rate is updated every 15 seconds according to the market situation. It is important to note that the composition of this stock market index is revised every quarter. When a company quoted on this index is removed it is generally replaced by one that is quoted on the FTSE 250 which is a larger version of the index we are studying here.
The number of assets quoted in this index can sometimes be higher than 100, notably when companies issue several different assets. To better understand how the London Stock Exchange Index, the FTSE 100, is composed here are the top 35 major companies included listed according to their capital:
- Royal Dutch Shell
- Vodafone Group
- British American Tobacco
- BG Group
- BHP Hilton
- Imperial Tobacco Group
- Reckitt Benckiser
- Standard Chartered
- National Grid
- Rio Tinto Group
- Lloyds TSB
- BAE Systems
- Scottish and Southern Energy
- Royal Bank of Scotland
- British Sky Broadcasting
- British Energy
- BT Group
- Compass Group
- Reed Esleivier
The different activity sectors represented here are agro-food, banking, energy and oil, insurance, distribution, brewing, mining, armaments, multimedia, pharmaceuticals, retail products, catering, tobacco, and telecommunications.
It should also be noted that the performance of the London Index is close to those of the Dow Jones, the CAC 40 and the DAX 30.
History of the London Stock Exchange:
To invest more successfully in the London Stock Exchange, its major stock market index, as well as its various assets using CFDs we offer you the opportunity here to learn more about the history of this financial marketplace which is one of the most important worldwide.
It was in 1776 that the London Stock Exchange as we know it today came into being. It was inspired by the traditions initiated at the time of the financial revolution that touched the country when a Mr. John Castaing who worked at Jonathan’s Coffee House published a list of prices under the name ‘The Course of the Exchange and other things’.
Following on from there, the 1840’s marked the beginning of a major expansion period of the London Stock Exchange with the acquisition by England of half the 9,500 kilometres of European railroads in 1845. This event took place at the time that became known as Railway Mania. The capital traded on the financial markets in the north of England greatly participated in this major event. Just before this period and for around a decade, we also note the entry onto the stock markets of a number of this country’s banks, and this continued for another decade. Of course, the London Stock Exchange was not the only financial marketplace in Europe at this time, it was already in direct competition with the Paris Stock Exchange and this continued until the First World War in 1914.
Still on the subject of the competition to the London Stock Exchange at this time, there were several regional financial markets in the United Kingdom that were well known during the period 1869 to 1929. These markets were in fact specialised in certain sectors and their strength increased until around 1900 notably due to the entry onto the stock markets of the localised railroad companies. Following this period these regional financial markets experienced a certain decline due to the larger London market.
It was in fact at this time that numerous companies took the decision to launch uniquely on the London Stock Exchange. It should be remembered that at this time nearly 25% of the companies that decided to become publicly traded companies on the stock market were on the London Stock Exchange and other regional stock markets concurrently.
Recent historical and great operations of the London Stock Exchange of the 21st Century:
Let us now continue with a more technical aspect of the London Stock Exchange with the major recent operations and history of this stock exchange in the 21st century.
To better understand how the London Stock Exchange operates it is important here to remember that this financial marketplace has received two major offers in the past from the American NASDAQ. These offers were made in 2006 and later again in 2007 for the sum of 2.7 billion pounds sterling. This second acquisition offer enabled NASDAQ to acquire a 0.41% part to add to the amount already owned by NASDAQ of 28.75%. Also in the same year we note the resale of a 28% part of NASDAQ to the Dubai Stock Exchange which enabled them to complete their offer for the Nordic OMX stock exchange operator.
In the same year, 2007, the London Stock Exchange also acquired the Milan Stock Exchange for the amount of 1.5 billion Euros. This acquisition marked the beginning of the London Stock Exchange Group, also called the LSEG.
Two years later, in 2009, the London Stock Exchange Group made an offer relating to the acquisition of 60% of Turquoise which led to the merger of this company with its subsidiary Baikal. Following this merger and acquisition, the London Stock Exchange sold 9% of its shareholding in Turquoise to investors.
2011 was also a noteworthy year for the London Stock Exchange as it was at this time that the group merged with the Toronto Stock Exchange in Canada. It was then valued at 3.25 billion dollars whereas the Toronto Stock Exchange was valued at 2.99 billion dollars. The newly formed group was therefore owned 55% by the London Stock Exchange shareholders and 45% by the shareholders of the Toronto Stock Exchange. However this merger was short lived and ceased in June of the same year, the Toronto Stock Exchange was finally purchased by a group of Canadian investors under the name of the Maple Group.
During the summer of 2014, the London Stock Exchange announced the acquisition of the Russel Investment financial services company for the sum of 2.7 billion dollars, this company was primarily responsible for managing a major investment fund. The same year, Qatar Holdings sold a third of its shares which came to 15% of the London Stock Exchange for sum close to 260 million pounds sterling.
In 2016 a new major merger was announced, this time between the London Stock Exchange and the German Deutsche Boerse.
In 2017 the London Stock Exchange resold the French clearing house for nearly 510 million Euros to Euronext in its objective towards a merger with the German Stock Exchange. But finally, a month later, in February 2017, the London Stock Exchange cancelled this merger due to its refusal to respond positively to the demands for the sale of assets in Italy which requested the European commission to assist in preserving competition. This refusal to these conditions by the London Stock Exchange did of course lead to the opposition of the European Commission to this merger project.
Finally, the last notable acquisition operation by the London Stock Exchange was the purchase of Yeld Book, a subsidiary of Citigroup, for the amount of 685 million dollars.