Share indices April 09

(By Richard Holway 5.00pm 4th May 09)
It is difficult to remember a month quite like April 09. As you can see in the table below, stocks roared ahead on both sides of the pond. Sure there was an 8% rise in the FTSE100 but this was eclipsed by the double-digit rises in all the tech and business services indices we follow. But it was the performance YTD which differed the most. Whereas the FTSE100 is still down 4.3% YTD, the FTSE SCS Index is up a massive 25%.You will have read in UKHotViews that the star area is outsourcing and BPO in particular. But it’s interesting that this is not reflected in the FT Support Services Index which is ‘only’ up 12% on the year. The reason is that many considered that great performance was already ‘priced in’ to stocks like Capita.

It’s also interesting how many of the star performers this month came by way of ‘recovery’ in the recruiters and resourcers like Parity (+62%), Robert Walters (+51%), Michael Page (+50%) and Harvey Nash (+39%). As we have said for decades, these companies are the ‘Barometer of the Industry’. They dive first. But, conversely, they are the first to show the ‘green shoots’. However, I think the only thing these rises are showing is that, perhaps, the massive falls of late in these stocks really do mark a low point.

The other star performer this month was Vin Murria’s Advance Computer Services (see Advanced Computer Services – 28th Apr 09)) up 74% and, at 36p, now more than double the 17p placing price of just 6 months ago when the new management took over. Talking of new management, the appointment of a new CEO and FD at Maxima (see New brace of management at Maxima – 27th Apr 09) boosted its share price by 60%.

Of the major UK SCS stocks, Fidessa was up 35%, Computacenter up 31%, Telecity up 25% and Logica up 21%.

Outside the UK, Unisys was the leading stock of those that we follow with a massive 130% rise. Given their continued dire performance, this is all down to rumours of a bid from IBM, HP or even Dell. The Indians all recovered well with WNS up 60%, Patni up 41% and Wipro up 35%.

But how long will this Bull market in all things Tech and Business Services last? As we said in IndustryViews a few weeks ago, over any medium term period, Tech Indices tend to track the FTSE100. They are currently getting seriously out of line. However, we don’t suggest that there will be a slump. More that a general rally in stocks, that started two months ago when FTSE100 hit its low on 6th March, will catch up with tech before the year is out.