Interesting facts about the FTSE (FTSE100 Index of the British stock exchange)
The FTSE 100 index, also known as 'Footsie,' was launched on January 3, 1984. 1,000 points were set as a base level. The index accounts for around 80% of the market cap of the London Stock Exchange. Although the FTSE 100 abbreviation is usually used among investors, it's worth knowing that FTSE stands for Financial Times Stock Exchange. The index appeared due to a need for an index that would be constantly updated within the trading day, reflecting the changes in the UK stock market.
When trading the London Stock Exchange index, you should consider the following factors that may affect the index's value. The first one is the companies that the index contains. To be included in the FTSE 100 index, a company should be a public limited firm listed on the London Stock Exchange. Also, the index has certain liquidity requirements. The second factor is weighting. FTSE 100 is a free-float capitalization-weighted index. This means that the index considers only those shares that are freely available for trading. The weighting by market capitalization determines which companies will receive a higher weighting in the index. The third thing you should keep in mind is that the index is reviewed quarterly. So, you should recheck what companies are included in the index every three months. The FTSE 100 is followed by the FTSE 250 index. When the companies are reviewed, they can move from one index to another as FTSE 250 presents the next 250 companies by market cap traded on the stock exchange. Every quarter, companies' market caps are ranked. If a company's capitalization rank falls below 110, it will be removed from FTSE 100. To be included in the FTSE 100 index, a company's capitalization rank should be above 90.
Another thing that has an impact on the index's value is global economic and political events. For example, one day in 1987, when the worst storm in 300 years hit Britain, the index took a break as the exchange didn't work. Another interesting example occurred on December 30, 1999, when the index hit a new record high of 6930.2 points, thanks to overpriced tech stocks during the dot com boom.
The price of the index hit an all-time high of 7,877.45 on May 22, 2018.
