Eight new economy firms replaced by old economy stocks in the FTSE 100
New economy stocks have suffered further indignation as the FTSE carried out its quarterly rebalance.
Eight more new economy stocks have been sanctioned to drop out of the FTSE 100 at close on 21 September and will be replaced by old economy businesses.
Carlton Communications, Misys, CMG, Colt Telecom, Telewest, Energis, Spirent and Marconi have all been demoted to the Mid 250 on the back of poor stock market performance this year.
Kevin Fenelon, investment manager at Britannic Asset Management, said that although the stocks will be sold off by tracker funds in the short term, it does not necessarily confine them to oblivion.
He added: 'It depends whether it is a reflection of deteriorating fundamentals. If it is simply a case of price rotation, it will be of short-term interest.'
Marconi has been the exchange's worst performing stock over the calendar year to 14 September, returning -97.12%.
The group has seen its share price fall from 1,144p to 33p over the past 12 months and has slipped to a ranking of 172 in market cap terms.
The technology, media and telecoms (TMT) laggards will be replaced by old economy players Friends Provident, Enterprise Oil, Wolseley, Severn Trent, British Land, Man Group, Northern Rock and Innogy Holdings.
Man Group is the newest company to be promoted to the FTSE 100. The specialist fund management group, which has posted growth of 49.43% over the calendar year to 14 September, first floated in 1994.
John Hatherly, head of research at M&G, said the movements were the exact opposite of March 2000's reshuffle, which saw a raft of new economy stocks depose their old economy counterparts.
'This reflects the fact that high yielding stocks have performed relatively well and technology has done badly,' said Hatherly.
'All companies that have moved up are older, traditional companies, except for Man Group. People will see it as very symbolic as to what is happening in the UK.'
There were few surprises in the reshuffle, said Hatherly, except for P&O Princess Cruises narrowly failing to make the FTSE 100. The group's share price slumped by 15% after events in the US last week due to investor concerns about the business' North American exposure.
The FTSE 250 will have 25 changes made to its constituents. The trend of new economy stocks underperforming old economy stocks is again apparent and characterised by the inclusion and exclusion of a number of high profile investment trusts.
The generalist Fidelity European Values and British Empire Securities and General Trust investment trusts have both grown to mid-cap status on the back of strong year-to-date performance.
Among those companies they will replace are the technology heavy Guardian Investment Trust, Polar Capital Technology and Herald Investment Trust.
Shares in Polar Capital have fallen from a 12-month high of 536.5p to a 12-month low of 163.5p as of 14 September, while Herald Investment Trust has displayed similar performance, trading at a year low of 237.5p, versus a year high of 695p.
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