FTSE 100 is a stock index of the 100 companies with the largest market capitalization listed on the London Stock Exchange. In practice, it houses the most important companies in the United Kingdom; giants like AstraZeneca, Shell, HSBC and BP. The UK 100 is a derivative product based on the FTSE 100 index.
How to trade stocks in the UK? If you want to trade the fortunes of the world’s sixth largest economy and the global economy in general, the UK 100 index is an excellent choice.
Whether you want to trade CFD indices, read on to know what the UK 100 index is and how to trade it. Find out how it is calculated, what its effects are, the advantages and disadvantages of trading and the strategies that can help you start off on the right foot.
What are the UK 100 and FTSE 100 indices?
The UK 100 is a financial derivative security which is based on the FTSE 100 stock index. It allows activities such as day trading and CFD trading to be conducted without owning FTSE 100 securities, and may also allow exposure to the market by far higher than the value of the investment.
The FTSE 100 is a stock index of the top 100 companies on the London Stock Exchange (SLE). In July 2022, its net market capitalization was £1.94 trillion. The top 10 listed companies comprised 49.34% of the total market capitalization and the largest company, AstraZeneca, accounted for 8.67% of the total.
Which companies are in the UK 100 index?
Companies in the UK 100 index are the top 100 stocks by free float adjusted market capitalisation. Free-float differs from full market capitalization in that it only counts shares that are free to trade and not those that are closely held or restricted, such as shares reserved for board members.
If a company listed on the LSE but not on the FTSE 100 sees its value rise above position 90 in the FTSE 100 index, it will take over from the company with the lowest position. Conversely, if a company’s market capitalization falls below 110, it can be de-listed from the FTSE 100 in the same way. The 90-110 rule was introduced to prevent the companies listed in the index from constantly changing.
To be listed on the LSE, the main requirements for companies include a minimum value of £700,000, a minimum percentage of vacant shares and three years of audited financial information.
Given the UK-focused but typically international nature of the index, the FTSE 100 incorporates a diverse range of industries and sectors. Notable companies include the healthcare, energy, financial services, consumer products, telecommunications, and minerals industries.
What does the FTSE UK 100 Index measure?
The FTSE 100 index measures the large-scale movements of the top 100 companies on the London Stock Exchange. The value of companies goes up and down, as does the index.
However, because the largest companies in the index account for only about 8% of the total value, the index is largely immune to company- or industry-related declines or increases in stock value, providing a more complete expression of the whole economy of British and global market sentiment.
How often does the UK FTSE 100 change?
Changes to the list of companies in the FTSE 100 Index take place every quarter, in March, June, September and December.
The FTSE Group analyzes the market shares of all LSE companies, ranks them and announces which are in or out of the top 100. The same goes for the FTSE 250 and the other LSE indices.
What is the history of the UK FTSE 100?
Launched on 3 January 1984, with an initial index level of 1,000 and a value of around £160bn, the FTSE 100 index quickly became the leading indicator of the health of the UK economy and blue-collar companies. UK chips.
The FTSE 100 index was hit hard by the Black Monday crash of 1987 and Black Wednesday crash of 1992, due to the UK’s exit from the European Exchange Rate Mechanism. It soared during the dotcom boom of the late 1990s, before collapsing when the bubble burst and the economy felt the effects of 9/11.
It recovered in the 1990s, until 2008, when the global financial crisis practically halved the value of the index. Over the last decade, however, the UK 100 has rebounded healthily, from 4,434 in 2008 to 7,384 in 2021.
Over time, the companies that make up the FTSE 100 have changed and today the index is international in nature, very different from the UK-focused index of the 1980s and 1990s.