Thursday, 1 October 2009

Share indices September 09

(By Richard Holway 9.00am Thurs 1st Oct 09) The financial headlines this morning might frighten you. The FTSE100 has just produced the best quarterly rise – up 20.8% - in its 25 year history. The previous best quarterly rise was the three months up to the bursting of the bubble in Q4 1999.

Earlier this year I started to warn that the UK FTSE SCS Index (indeed every other Tech indices) was getting seriously out of line with the FTSE100. Over every ‘medium’ period of time since I became an ‘analyst’ in 1986, the FTSE SCS has aligned with the FTSE100 – eventually. It became seriously ‘un-aligned’ in the boom but re-aligned over the following couple of years.

The first half of 2009 saw the FTSE SCS rise by 34% against a 4% decline in the FTSE100. At that time I suggested that either the FTSE SCS would slump or the FTSE100 would rise to catch up. The FTSE100 did, as I noted above, produce a record rise of 20.8% in Q3 BUT the FTSE SCS rose still further by an even higher 23%.

So, we are now in an unprecedented position of reporting a FTSE SCS rise of 65% YTD compared with a 16% rise in the FTSE 100. Be scared. Be very scared.

September saw a 10.6% rise in the FTSE SCS compared with a 4.6% rise in the FTSE 100. NASDAQ continued its record rise too – 4.6% in Sept and 35% YTD.

Of the FTSE SCS Index constituents, Autonomy was the best performer in Sept – up 25% and 65% YTD. As George O’Connor said in his morning note today “Autonomy has one of the most exciting technology franchise – a good product will always out.” Computacenter also powered ahead with a 20% rise (see Computacenter winning services share) and Logica put on 13% making a massive 86% rise YTD (see Logica margin challenge). Wooden Spoon goes to MicroFocus with a 6% decline mainly occasioned by the resignation of Steve Kelly. See Microfocus – Full of Surprises.

Outside the UK, it will come as no surprise that Perot Systems was the highest riser – up 75% in the month on its takeover by Dell. See Dell, Perot try the Texas Tango. With an eye to some of our avid readers, Sopra (up 31% - see Sopra, Steria losing UK market share) and Steria (up 29% - see Steria update) also did very well.

Top gainer among the India-based SIs was iGate (+26%), with Satyam’s ADR (or more correctly, Mahindra Satyam) just tipping +20%, a shade ahead of Mphasis (I suppose we should call them HP Enterprise Services India now!). Of the majors, TCS rose 18%, Wipro (ADR), 13%, HCL 11%, with Infosys (ADR) and Cognizant up 10%. Patni rose 7%. All these therefore beat the BSE Sensex index (+8%) and Nasdaq (+5%).

In the UK outside of the FTSE SCS stocks, Parity (see Parity switches offshore partners) will be disappointed with their 26% slump; just pipped for the Wooden Spoon by MinorPlanet’s 30% fall.

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