Out-Law / Your Daily Need-To-Know

The recent disposal of technology stocks worldwide has hit some of the major UK companies hard, as Psion, Baltimore Technologies, Kingston Communications and Thus fall from the FTSE 100, having only joined in March this year.

They have made way for the return of old economy stocks, Hanson, Scottish & Newcastle and others.

When Psion and the others joined the 100 leading UK companies three months ago, it was viewed as a new era for technology stocks and the biggest shake-up of the FTSE 100 index since it was launched in 1982.

However, stock markets worldwide have been volatile recently, sparked by fears that the profitability of internet companies will not approach the valuations of the companies, with many investors preferring “safer” old economy shares.

The drop in value of the technology shares, coupled with the recent high profile collapse of Boo.com and some other recent internet companies could make venture capitalists reluctant to fund start-ups in new media and e-commerce businesses.

One stockbroker described the turbulence in the market as “normal service re-establishing itself.”

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